How much should you be willing to pay for the bond

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Reference no: EM131994446

1. A recent college graduate hopes to have $200000. Saved in their retirement account 25 years from now by contributing $150 per month in a 401(k) plan. The goal is to earn 10% annually on the monthly contribution. Will they have $200000. At the end of the 25 years?

2. You are considering a 15-year, $1,000 par value bond. Its coupon rate is 9%, and interest is paid semiannually.

If you require an "effective" annual interest rate (not a nominal rate) of 11.17%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent.

Reference no: EM131994446

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