What is present value of this investment at interest

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1. Rohan is considering an investment that will return $1 per year growing at 3% per year forever (n = ∞). At the end of year 1 he would get $1. At the end of year 2 he would get $1.03 and so on. What is the present value of this investment at an interest rate of 10% per year compounded yearly?

2. Iguana Inc. bonds are priced to yield 9%, carry a 6% coupon, and mature in 5 years. These bonds can be called away in 2 years at a 4% premium. Find the intrinsic value of these bonds. Round intermediate steps to four decimals and your final answer to two decimals.

3. Jake owes $3,000 on his credit card. He is not charging any additional purchases because he wants to get this debt paid in full. The card has an annual rate of 18%. How long does it take to pay off this balance if he makes monthly payments of $30? What if he makes monthly payments of $50?

Reference no: EM131991838

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