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An engineer planning for his retirement thinks that the interest rates in the marketplace will decrease before he retires. Therefore, he plans to invest in corporate bonds. He plans to buy a $50,000 bond that has a bond interest rate of 12% per year, payable quarterly with a maturity date 20 years from now. (a) How much should he be able to sell the bond for in 5 years if the market interest rate is 8% per year, compounded quarterly? (b) If he invested the interest he received at an interest rate of 12% per year, compounded quarterly, how much will he have (total) immediately after he sells the bond 5 years from now?

Financial Management, Finance

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