Which of the following assets is worth the most

Reference no: EM13256306

Which of the following assets is worth the most? Which is worth the least?

a) a 25 year, $1,500,000 zero-coupon (no interest) bond
b) a 40 year annuity paying $25,000 per year
c) a new 10 year bond that pays $20,000 per year in interest income plus the return of the principal of $400,000 at maturity

For purposes of this problem, assume that we have determined that an appropriate discount rate to apply for all three instruments is 6%. Assume also that all payments occur at the ends of years involved.

Reference no: EM13256306

Questions Cloud

Determine range of values for t that allow complete recovery : Let y(t) he the signal at the output of the LTI system when x(t) is the input signal. The following signals are sampled using a train of impulses with periodicity T, signal x(t) is sampled to obtain xc(t), and signal y(t) is sampled to obtain yc(t..

How much should you pay for the bond : Assume that you have the opportunity to buy a 30 year, zero coupon, $60,000 bond. You determine that the yield on a comparable bond (comparable in terms of risk, liquidity, etc.) is 4.0%. How much should you pay (maximum) for the bond? Assume an e..

What is the distance above the victims arm : A blood transfusion is being set up in an emergency room for an accident victim. What is the distance h above the victim's arm where the level of the blood in the transfusion bottle should be located

How much would that 22 year old bond sell for today : Assume that the Treasury sold a $100,000, 30 year bond exactly twenty two years ago. That bond carried a coupon rate of 10.5%. Also assume that today Treasury security maturing in the five to ten year period yield 2.0%. How much would that 22 year..

Which of the following assets is worth the most : Which of the following assets is worth the most? Which is worth the least?

Why results are different at the different interest rates : How much would $1,000,000 due in 100 years be worth today if the discount rate was 5%? if the discount rate was 10%. Discuss how and why the results are different at the different interest rates.

What is the total energy stored in the electric field : A 1.50cm diameter parallel plate capacitor with a spacing of 0.600mm is charged to 400V. What is the total energy stored in the electric field

Determine the weight of the rod : On a part-time job, you are asked to bring a cylindrical iron rod of density 7800kg/m3, Calculate the weight of the rod, w

Calculate the present value at each interest rate : Land is already owned. The price of a new is windmill is $150,000. A minimum of fifty windmills are needed to achieve desired efficiency compared to the current coal burning method.

User Account

All Pages