What is this gift worth at the present time

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Reference no: EM133074766

Question - Topic - Compound Interest

Q1. Your rich uncle has just given you a high school graduation present of $900,000. The present, however, is in the form of a 38-year bond with an annual interest rate of 6.7% compounded annually. The bond says that it will be worth $900,000 in 38 years. What is this gift worth at the present time?

Q2. Your rich aunt gives you a high school graduation present of $180,000. Her present is in the form of a 7-year bond with an annual interest rate of 6.2%. The bond says that it will be worth $180,000 in 7 years. What is this gift worth at the present time?

Q3. One bank advertises a nominal rate of 3.11% compounded quarterly. A second bank advertises a nominal rate of 3.03% compounded weekly. What are the effective yields? In which bank would you deposit your money?

Reference no: EM133074766

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