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 ?