Answer to Question #142189 in Accounting for Abdul samad khan

Question

you recently invested $300,000 of your savings in a security issued by a large company. security agreement pays you 6.5% semi anually and 3% on quarterly basis. what is the total cash flow you expect to recieve from this investment, if compunded seminar for the first 3 years and on quarterly basis for 3 years separated itnlo the return on investment

Answer 1

If there is no discount rate, then the total cash flow we are going to receive:

$300,000×(0.065×6 + 0.03×12) = 225,000$, which is less than the initial investment of 300,000.