Marie Snell Recently Inherited Some Bonds (Face Value $100,000)from Her

question 112

Multiple Choice

Marie Snell recently inherited some bonds (face value $100,000) from her father,and soon thereafter she became engaged to Sam Spade,a University of Florida marketing graduate.Sam wants Marie to cash in the bonds so the two of them can use the money to "live like royalty" for two years in Monte Carlo.The 2 percent annual coupon bonds mature on January 1,2030,and it is now January 1,2010.Interest on these bonds is paid annually on December 31 of each year,and new annual coupon bonds with similar risk and maturity are currently yielding 12 percent.If Marie sells her bonds now and puts the proceeds into an account which pays 10 percent compounded annually,what would be the largest equal annual amounts she could withdraw for two years,beginning today (i.e. ,two payments,the first payment today and the second payment one year from today) ?

• A) $13,255
• B) $29,708
• C) $12,654
• D) $25,305
• E) $14,580

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Definitions:

Monocular Cues

Visual signals that require one eye to perceive depth and distance.

Artists

Individuals who create art, which may include paintings, sculptures, performances, and other media, often expressing imaginative or technical skill.

Perceptual Hypotheses

Theories or assumptions that an individual makes about the nature of objects or events based on their perceptual input.

Distal Stimuli

Objects or events in the external world that provide the source of sensory input, leading to perception.