To complete this assignment, show your work when answering the questions provided in the Assignment $2$ Questions Template.docx worksheet. Feel free to type your answers in the Microsoft Word document using the Equation Editor opens in new window, or write your solutions on paper, scan them, and upload them to the Submission Folder.

This assignment is graded, and it is worth $3\mathrm{.}5\%$ of your overall grade. It will allow you to demonstrate your understanding of the following concepts:

Calculate various components of a Perpetuity and Deferred Annuities and have an ability to solve problems involving both of these special cases of Annuities.

Calculate Mortgages and construct Amortization Schedules.

Demonstrate the concept of Bonds and Sinking Funds and the ability to make relevant calculations with each. use MATERIALS AND RESOURCES from

Publisher Materials: BUSINESS MATH: A Step$-$By$-$Step Handbook by J$.$ Olivier, Lyryx$,$ Chapters $12,13,14.$

Assignment $2$ Questions Template

Part $1$: Solve the following questions based on Perpetuity and Deferred Annuity:

Question $1$

The dean of the School of Business and Applied Arts at Red River College in Winnipeg wants to establish a scholarship program for the newly created finance major in its business administration stream. He wants to distribute five $$2,000$ scholarships annually starting immediately.

How much money must he raise from college supporters if the perpetuity can earn $3\mathrm{.}6\%$ compounded monthly?

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Question $2$

Jeff and Sarah want an ordinary annuity to pay their daughter $$1,000$ monthly for three years and nine months for the duration of her educational studies starting August $1,2024.$ What lump$-$sum amount do they need to invest on August $1,2014,$ if the deferred annuity can earn $6\mathrm{.}6\%$ compounded monthly during the accumulation stage and $4\%$ compounded quarterly during the income payments stage?

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Part $2$: Solve the following based on Bonds:

Question $1$

A $$275,000$ face value Province of British Columbia bond carrying a $10\mathrm{.}6\%$ coupon is issued on September $5,1990,$ with $30$ years until maturity. The bond is purchased on March $5,2002,$ when posted rates are $5\mathrm{.}98\%.$ Calculate the purchase price of the bond. What is the amount of its premium or discount?

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Question $2$

A $$50$ million face value bond carrying a $4\mathrm{.}83\%$ coupon with $25$ years until maturity is issued. The bond has a sinking fund requirement with semi$-$annual payments designed to retire the full face value upon maturity. If the sinking fund is expected to earn $3\mathrm{.}89\%$ compounded semi$-$annually, calculate the annual cost of the bond debt. What is the book value of the debt after $10$ years?

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