In: Finance
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.
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