If marie sells her bonds now and puts the proceeds into an


Marie Snell recently some bonds (face value $100,000) from her father, and soon thereafter she become engaged to Sam Spade, a University of Florida marketing graduate. Sam wants Marie to cash in the bonds so the two of them can use the money to "live like royalty" for two years in Monte Carlo. The 2 percent annual coupon bonds mature on December 31, 2022, and it is now January 1, 2023. Interest on these bonds is paid annually on December 31 of each years, and new annual coupon with similar risk and maturity are currently yielding YTM of 12 percent. If Marie sells her bonds now and puts the proceeds into an account that pays 10 percent compounded annually, what would be the equal annual amounts she could withdraw for two years, beginning today (that is, two payments, the first payment today and the second payment one year from today)?

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Finance Basics: If marie sells her bonds now and puts the proceeds into an
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