FIN 534 Week 3 Chapter 5 Solution
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additional $ 5,000 in each of the next 4 years( at t = 1, 2, 3, and 4). Then they plan to make 3 equal annual contributions in each of the following years, t = 5, 6, and 7. They expect their investment account to earn 9 %. How large must the annual payments at t = 5, 6, and 7 be to cover Ellen \' s anticipated college costs?
a. $ 1,965.21 b. $ 2,068.64 c. $ 2,177.51 d. $ 2,292.12 e. $ 2,412.76
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FIN 534 Week 3 Chapter 5 Solution
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Three $ 1,000 face value bonds that mature in 10 years have the same level of risk, hence their YTMs are equal. Bond A has an 8 % annual coupon, Bond B has a 10 % annual coupon, and Bond C has a 12 % annual coupon. Bond B sells at par. Assuming interest rates remain constant for the next 10 years, which of the following statements is CORRECT?