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Studying yields from two different bond portfolios

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A $100,000 bond portfolio generates exactly $9,000 per year in income. Another $100,000 portfolio currently yields $7,000 per year in income, but this amount is expected to grow at 4 percent annually. In about how many years will the two portfolios yield equal amounts?

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Solution Summary

The solution describes the steps to calculate the time period when returns from two different portfolios will be the same.

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Solution:

Yield in plan 1=$9000 per annum
Yield in Plan 2= $7000 per annum
Growth of yield in plan ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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