Problem:
Valuing a Bond, A company issues a bond with semiannual interest payments of $45 for 10 years and a lump-sum repayment of the $1,000 face value of the bond after 10 years. If the bond market requires 10% interest compounded semiannually for the debt issued by the company, what is the market price (present value) of the bond?
Accumulating a target level of wealth, Carolyn Martin, who is now 30 years old, wants to retire at age 60 with $2.5 million in an investment account. If funds can be invested to earn 12% per year compounded annually, what equal annual amount must she invest at the end of the each year? What will be the required amount if the funds are invested to earn 12% per year compounded semiannually?