Present value of annuity stream of five annual cash flows

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1. Calculate the present value of annuity stream of five annual cash flows of $1200, with first cash flow received in one year, assuming a discount rate of 10 percent.

2. Consider two bonds, Bond A and B. both with a coupon rate 10 percent and a yield to maturity of 10 percent. These are standard bonds with semiannual coupon payment. Bond "A" matures in 5 years and B matures in 10 years. what is the price of each bond?, suppose interest rate decline causing the yield to maturity for each bond to immediate decline to 9 percent. what is the new price of each bond?

Reference no: EM132006192

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