You bought one of Great White Shark Repellant Co.’s 8 percent coupon bonds one y

Question

You bought one of Great White Shark Repellant Co.’s 8 percent coupon bonds one year ago for $1,044. These bonds make annual payments and mature 13 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 6 percent. If the inflation rate was 3.4 percent over the past year, what was your total real return on investment? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

These bonds make annual payments and mature 13 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 6 percent. If the inflation rate was 3.4 percent over the past year, what was your total real return on investment? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16) not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Total real return

Explanation / Answer

no of period 13 PMT 80 rate 6% Fv 1000 PV $1,177.05 rate earned = ((1177.05-1044)+80)/1044 ie = 20.41% real rate = (1.2041/1.034)-1 ie= 16.45%

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