A Guaranteed Contract Entitles Jon to Receive $525 at the End

question 5

Multiple Choice

A guaranteed contract entitles Jon to receive $525 at the end of every six months for the next nine years plus an additional single payment of $10,000 in nine years. If Jon sells the contract to The Corleone Finance Company now, for a price that would provide Corleone with a rate of return of 7.4% compounded semi-annually, what would that price be?

• A) $14,649.75
• B) $16,811.17
• C) $9,408.82
• D) $12,010.92
• E) $19,450