contestada

We Pay Insurance Co. will pay you $1,050 each quarter for 22 years. You want to earn a minimum interest rate of .83 percent per quarter. What is the most you are willing to pay today for these payments

Respuesta :

tutordamola

Answer:

The answer is $65,382.03

Explanation:

The payment is quarterly, meaning, the interest will be paid 4 times in a year

N(Number of periods) = 88 times ( 22years x 4)

Interest rate = 0.83percent

PV(present value or market price) = ?

Annuity = $1,050

We are using a Financial calculator for this.

N= 88; I/Y = 0.83; PMT = 1.050; CPT PV= -65,382.03

Therefore, the market price of the bond is $65,382.03