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You will be paying $8,000 a year in tuition expenses at the end of the next two years. Bonds currently yield 8%. a. What is the present value and duration of your obligation

Sagot :

The present value is $14,266.12, while the duration of the obligation is 1.48 years.

How to Calculate Present Value and Duration of an Obligation

Note: See the attached photo for the calculations of both the present value and duration.

In the attached photo, note the following in the calculation of the discounting factor:

r  = Current bond yield = 8%

Also from the attached photo, we have:

Present value = Total of present value = $14,266.12

Duration of the obligation = Total of duration in year = 1.48 years

Learn more here: https://brainly.com/question/14799840.

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