If an investor wants to receive 500000 euros and the expected yield on the 12-year bond...

If an investor wants to receive 500000 euros and the expected yield on the 12-year bond is 7.2% then what would be the amount of an initial investment? State the answer as a number with 2 decimals without any currency sign.

Solutions

Expert Solution

Initial investment = Future value / (1 + rate)^time

Initial investment = 500,000 / (1 + 0.072)^12

Initial investment = 500,000 / 2.30323

Initial investment = 217,086.38

jeff jeffy answered 1 year ago

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