Answer Happy

(Related to Checkpoint 5.6) (Solving for 1) Springfield Learning sold zero coupon bonds (bonds that don't pay any interest, instead the bondholder gets just one payment, coming when the bond matures, from the issuer) and received $1,100 for each bond that will pay $18,000 when it matures in 30 years. a. At what rate is Springfield Learning borrowing the money from investors? b. If Nancy Muntz purchased a bond at the offering for $1,100 and sold it 20 years later for the market price of $3,200, what annual rate of return did she earn? c. If Barney Gumble purchased Muntz's bond at the market price ($3,200) and held it 10 years until maturity, what annual rate of return would he have earned? a. At what rate is Springfield Learning borrowing the money from investors? 1% (Round to two decimal places.)
(Solving for n with non-annual periods) Approximately how many years would it take for an investment to grow twofold if it were invested at 11 percent compounded semiannually? Assume that you invest $1 today. If you invest $1 at 11 percent compounded semiannually, about how many years would it take for your investment to grow twofold to $2? (Hint: Remember to convert your calculator solution to years.) years (Round to one decimal place.)