Pierre Dupont just received a cash gift from his grandfather. He plans to invest in a five-year bond issued by Venice Corp. that pays a coupon rate of 5.5 percent. If the current market rate is 7.25 percent, what is the maximum amount Pierre should be willing to pay for this bond?

$928.71

Explanation:

The maximum amount that the Pierre should pay for the bond is equal to present value of all the cash flows associated with this bond over a life of 5 years of bond.

Assuming that the par value of the bond is $1,000, the coupon rate payment associated with this bond is, 5.5%*1,000=$55 per year for 5 years and the bond will mature at its par value of $1,000 at the end of its 5th year.

Year                  Cash Flows                         Present [email protected]%

1-5                        $55                                              $224

5                           $1,000                                         $704.71

Maximum amount that Pierre should pay            $928.71

bd = 9 cm

step-by-step explanation:

in a 30°-60°-90° triangle, the ratio of side lengths is 1 : √3 : 2. that is, the longest side (hypotenuse) is twice the length of the shortest side.

all of the triangles in your geometry are 30°-60°-90° triangles. ac is the hypotenuse of δacd, and the short side of δabc.

the short side ad of δacd will be half the length of ac, so 3 cm. the hypotenuse ab of δabc will be twice the length of ac, so 12 cm. segment bd is the difference of the lengths ab and ad, so is

bd = ab -ad

bd = 12 cm - 3 cm = 9 cm

comment on side length ratios

you can figure the ratios of side lengths in a 30°-60°-90° triangle by considering the trig ratios of the angles. or you can figure the length of the altitude of an equilateral triangle of side length 2 using the pythagorean theorem.

answer; the above statement is (true);