137. A life insurance company invests two million in a 10-year zero-coupon bond and four million in a 30-year zero-coupon bond. The annual effective yield rate for both bonds is 8%. (1+0.08) When the 10-year bond matures, the company reinvests the proceeds in another 10-year zero- coupon bond. At that time the bond yield rate is 12% annual effective. After 20 years from the initial investment, the 30-year bond is sold to yield an annual effective rate of 10% to the buyer. The maturity of the second 10-year bond and the sale of the 30-year bond result in a gain of X on the company's initial investment of six million. 14317849-995 Calculate X. ١٥ | وه
137. A life insurance company invests two million in a 10-year zero-coupon bond and four million in a 30-year zero-coupon bond. The annual effective yield rate for both bonds is 8%. (1+0.08) When the 10-year bond matures, the company reinvests the proceeds in another 10-year zero- coupon bond. At that time the bond yield rate is 12% annual effective. After 20 years from the initial investment, the 30-year bond is sold to yield an annual effective rate of 10% to the buyer. The maturity of the second 10-year bond and the sale of the 30-year bond result in a gain of X on the company's initial investment of six million. 14317849-995 Calculate X. ١٥ | وه
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 11P
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