ScholarMatic: Explanation & Answer
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Which of the following assets is worth the most? Which is worth the least?
a) a 25 year, $1,500,000 zero-coupon (no interest)
b) a 40 year annuity paying $25,000 per year
c) a new 10 year bond that pays $20,000 per year in interest income plus the return of the principal of $400,000 at maturity
Assume a 6.0% Interest rate
rework problems with a 3.0% interest rate and briefly explain why the numbers changed and what is worth most and least with new calculation
ScholarMatic: Explanation & Answer
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