6. An initial sum of $50,000 is invested in a bond. You will receive payments of $2,000 semi-annually for 10 years. a. What is the semi-annual interest rate this bond pays? b. If you sold the bond after 5 years for $60,000 what would be your rate of return?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....
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6. An initial sum of $50,000 is invested in a bond. You will receive payments of $2,000
semi-annually for 10 years.
a. What is the semi-annual interest rate this bond pays?
b. If you sold the bond after 5 years for $60,000 what would be your rate of return?
Transcribed Image Text:6. An initial sum of $50,000 is invested in a bond. You will receive payments of $2,000 semi-annually for 10 years. a. What is the semi-annual interest rate this bond pays? b. If you sold the bond after 5 years for $60,000 what would be your rate of return?
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