Solution-Cash flow provided by the bond

Cash flow provided by the bond

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Reference no: EM131190124

Use a calculator or Excel to find the yield on each investment below as measured by its internal rate of return. Express as a percent rounded to two decimal places; that is, _._ _%. Show work by listing your calculator steps, giving the Excel formula, or pasting the cells from your Excel spreadsheet.

a. A U.S. savings bond costs $660 now, and will pay its face value of $1000 at maturity in 10 years. The single payment at maturity is the only cash flow provided by the bond.

b. A corporate bond costs $950 now (Year 0). It will make interest payments of $70 each in years 1, 2, and 3. In year 4, the bond will pay $70 in interest and pay its face value $1000.

Reference no: EM131190124

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Cash flow provided by the bond

Reference no: EM131190124

Reference no: EM131190124

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