Question: QUESTION 2 Assume a $1,000 face value bond has a coupon rate of 9.5% paid semiannually and has an eight-year life. If investors are willing

QUESTION 2

Assume a $1,000 face value bond has a coupon rate of 9.5% paid semiannually and has an eight-year life. If investors are willing to accept a 12 percent rate of return on bonds of similar quality, what is the present value or worth of this bond?

QUESTION 3

1.Use a financial calculator or computer software program to answer the following questions:

a.What is the present value of $450,000 that is to be received at the end of 20 years if the discount rate is 10%?

b.How would your answer change in (a.) if the $450,000 is to be received at the end of 15 years?

QUESTION 4

1.You are considering borrowing $200,000 to purchase a new home.

a.Calculate the monthly payment needed to amortize a 7% fixed-rate 30-year mortgage loan.

b.Calculate the monthly amortization payment if the loan in (a.) was for 15 years.

QUESTION 5

1.Assume you are planning to invest $200 each year for four years and will earn 8 percent per year. Determine the future value of this annuity due problem if your first $200 is invested now.

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