Bondholders expected rate of return

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Reference no: EM131821499

1. (Future value of an annuity?) In 10 years you are planning on retiring and buying a house in? Oviedo, Florida. The house you are looking at currently costs $100,000 and is expected to increase in value each year at a rate of 5 percent. Assuming you can earn 9 percent annually on your? investments, how much must you invest at the end of each of the next 10 years to be able to buy your dream home when you? retire?

a. If the house you are looking at currently costs $100,000 and is expected to increase in value each year at a rate of 5 percent, what will the value of the house be when you retire in 10 years? $?(Round to the nearest? cent.)

b. Assuming you can earn 9 percent annually on your? investments, how much must you invest at the end of each of the next 10 years to be able to buy your dream home when you? retire? $?(Round to the nearest? cent.)

?2. (?Bondholders' expected rate of return?) You purchased a bond for $925. The bond has a coupon rate of 12 percent, which is paid semiannually. It matures in 11 years and has a par value of $1,000. What is your expected rate of? return? Your expected rate of return is ?%. (Round to two decimal? places.)

?3. (Loan amortization?) On December? 31, Son-Nan Chen borrowed ?$95,000?, agreeing to repay this sum in 23 equal? end-of-year installments and 17 percent interest on the declining balance. How large must the annual payments? be? The amount of the annual payments must be ?$ ?(Round to the nearest? cent.)

Reference no: EM131821499

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