How much is the bond worth today

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Reference no: EM132535107

Question 1. (a) Suppose you currently have RM2,000 and plan to purchase a 3-year certificate of deposit (CD) that pays 4% interest compounded annually. How much will you have when the CD matures?

(b) How would your answer change if the interest rate were 5%, or 6%, or 20%?

Question 2. (a) A company's sales in 2019 were RM100 million. If sales grow at 8%, what will they be 10 years later?

(b)What would they be if they decline by 8% per year for 10 years?

Question 3. Suppose a risk-free bond promises to pay RM2,249.73 in 3 years. If the going risk-free interest rate is 4%, how much is the bond worth today?

Question 4. Credit card issuers must by law print their annual percentage rate (APR) on their monthly statements. A common APR is 18%, with interest paid monthly. What is the EFF% on such a loan?

Question 5. An investment costs RM465 now and is expected to produce cash flows of RM100 at the end of each of the next 4 years, plus an extra lump sum payment of RM200 at the end of the 4th year. What is the expected rate of return on this investment?

Reference no: EM132535107

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