Using the formulas for finite geometric series: (b) Suppose UTM issues bonds with a one-year maturity and \$1000 face value on January 1, 2019.
Question

# Using the formulas for finite geometric series:

(b) Suppose UTM issues bonds with a one-year maturity and \$1000 face value on January 1,

2019. These bonds pay quarterly coupons of \$50 on April 1, 2019; July 1, 2019; October

1, 2019; and January 1, 2020. Compute the present value of this annuity in two ways:

First by using simple compounding interest to bring back each individual payment, then

confirm your answer by using the annuity formula you found in part (a). Assume an

APR of 1.3%.

### Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

• ### -

Study Documents

Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

Browse Documents