Which would you rather have: $100,000 cash now or $100,000 at 8% interest invested in bonds after maturing in 20 years?
Please explain your choice and why. It would be your own choice. Kind of like winning the lottery.
I just need to know calc for what $100,000 at 8% interest invested in bonds would be after maturing in 20 years.
Most individuals would take cash now as opposed to later, but the motivations for doing so may have more to do with use of funds rather than a cold calculation about the value of funds in the future as compared to today. Even with lottery winners, as you mention, the recipients often take the cash today even though it is deeply discounted, as compared to an annuity going forward.
One should judge the quality of the investment, the rate of return, and the other options for investment to compare the ...
The solution explains about bonds and their coupon payments. It explains the market changes to the price of bonds based on yield in the market place. There is also an example of a zero-coupon bond. The difference in earnings from an annual compounding to a semi-annual compounded is shown in an example.