A General Power bond carries a coupon rate of 8%, has 9 years until maturity, and sells at a yield to maturity of 7%. (Assume annual interest payments.) a. What interest payments do bondholders receive each year

$80

Explanation:

The computation fo the amount of the interest payment that bondholders received each year is shown below:

= face value of the bond × coupon rate

= $1,000 × 8%

= $80

We assume the face value of the bond be $1,000

We simply applied the above formula

And, the same is to be considered

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20