You purchase a high-yield, junk bond for $1,000 that pays $140 annually. After buying the bond, yields decline and you are able to reinvest the interest at only 9 percent. You reinvest all the interest payments. How much will you have when the bond is retired after twelve years? What was the annual return you earned on this investment? ?
What will be an ideal response?
?The $140 are reinvested annually at 9% and grows to $140(20.141)9 = $2,820. (20.141 is the interest factor for the future value of an annuity at 9% for twelve years.)? (PV = 0; I = 9; N = 12; PMT = -140, and FV = ?. FV = 2820.)?The sum of the reinvested interest and the principal repayment is $2,819.74 + 1,000 = $3,820.? The realized return is $1,000(1 + g)12 = $3,820.? The interest factor is (1 + g)12 = 3,820. Solving for g yields approximately 12%.? (PV = -1000; I = ?; N = 12; PMT = 0, and FV = 3920. I = 11.82.)?Point out the importance of the reinvestment rate. In this case, the investor earns more than two percent less than the anticipated 14% return on the investment.
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a. $ 1,600 b. $ 2,000 c. $ 2,200 d. $ 2,800
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A general journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction.
Answer the following statement true (T) or false (F)
Shane wants to find a mentor. A good first place to start is ______.
A. his subordinates B. his coworkers C. his chief executive officer (CEO). D. his boss