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Unformatted text preview: Unit 5 DS Solutions MT 217 You purchased a $1,000 five percent coupon bond that matures in 10 years. How much would your bond be worth if interest rates fall to 4% the day after you purchase the bond? What would the bond be worth in one year if interest rates fell t FV PMT n i PV First part 1000 50 10 0.04 ($1,081.11) negative be Part Two 1000 50 9 0.04 ($1,074.35) negative be Take a look at the Excel formulas in the CELL for the values in RED … see how we go I used the Excel formula for PV PV(rate,nper,pmt,fv,type) Rate is the interest rate per period. For example, if you obtain an automobile loan at a 10 percent annual in Nper is the total number of payment periods in an annuity. For example, if you get a four-year car loan and Pmt is the payment made each period and cannot change over the life of the annuity. Typically, pmt includ Fv is the future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, iis the future value, or a cash balance you want to attain after the last payment is made....
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- Spring '11
- Interest, Payment, payments, four-year car loan