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Essay text:
With the certificate of deposit, you make an initial investment at the beginning of the first year.
a. What single payment could be made at the beginning of the first year to achieve this objective?
Appendix b
PV=FV X PVif(8%, 10 periods)
=28,974 x .463 = 13,415
b. What amount could you pay at the end of each year annually for 10 years to achieve this same objective? Apendix C
A=FVA/FV(IFA) = 28,974/14.487= $2,000
Problem P10 ? 2:
2. Midland Oil has $1000 par value bonds outstanding at 8 percent interest. The bonds will mature in 25 years. Compute the current price of the bonds if the present yield to maturity is:
7 Percent
PVa = A x PV (n=25, i=7%)
PV = 80 x 11...
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