To avoid unpleasant surprises, the couple opts to invest the money very safely. The following options are open to them:
Insured savings with 7.5% annual yield.
Six-year government bonds that yield 7.9% and have a current market price equal to .98 face value.
Nine-year municipal bonds yielding 8.5% and having a current market price equal to 1.02 face value (you pay $1.02 to buy the bond worth $1.)
How should the couple invest the money over the next 10 years? (Hint: Answer is $468,500)
I have an excel file I’ve been working with, but don’t see a way to upload it. I’m sure my formulas are completely off, not understanding the banking side of the interest calculations. If you let me know your email address, I will send the file.
“Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!”