Substantial discount from its face value

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1. You have $50,000 in savings for retirement in an investment earning 6% annually. You aspire to have $1,000,000 in savings when you retire. Assuming you add no more to your savings, how many years will it take to reach your goal?

2. A zero-coupon bond is a security that pays no interest, and is therefore bought at a substantial discount from its face value. If the interest rate is 8% with annual compounding how much would you pay today for a zero-coupon bond with a face value of $2,500 that matures in 6 years?

Reference no: EM132073907

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