What would be total real return on investment

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Reference no: EM131545623

You bought one of Rocky Mountain Manufacturing Co.’s 8 percent coupon bonds one year ago for $1,050.30. These bonds make annual payments and mature nine years from now. Suppose that you decide to sell your bonds today, when the required return on the bonds is 7.5 percent. If the inflation rate was 3.5 percent over the past year, what would be your total real return on investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Total real return on investment: * Im just stumped on this part: To find the return on the coupon bond, we first need to find the price of the bond today. Since the bond has 9 years to maturity, the price today is: P1 = $80.00(PVIFA7.5%,9) + $1,000 / 1.0759 P1 = $1,031.89.

Reference no: EM131545623

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