44

37.4
24.93333

Year Installment Years kept in bank Amount at the end of 25 yrs

1 1.5 24 9.5117711059
2 1.5 23 8.8071954684
3 1.5 22 8.1548106189
4 1.5 21 7.550750573
5 1.5 20 6.9914357158
6 1.5 19 6.4735515887
7 1.5 18 5.9940292488
8 1.5 17 5.5500270822
9 1.5 16 5.138913965
10 1.5 15 4.7582536713
11 1.5 14 4.4057904364
12 1.5 13 4.0794355892
13 1.5 12 3.7772551752
14 1.5 11 3.4974584956
15 1.5 10 3.2383874959
16 1.5 9 2.9985069407
17 1.5 8 2.7763953154
18 1.5 7 2.5707364032
19 1.5 6 2.3803114844
20 1.5 5 2.2039921152
21 1.5 4 2.04073344
22 1.5 3 1.889568
23 1.5 2 1.7496
24 1.5 1 1.62
25 1.5 0 1.5
37.5 109.6589099291 16.01216
36%
Year Deposit Withdrawal Balance at EOY
1 29387 31737.4750807
2 29387 66013.9481678
3 29387 103032.539102
4 29387 143012.617311
5 29387 186191.101776
6 30000 168686.389918
7 30000 149781.301112
8 30000 129363.805201
9 30000 107312.909617
10 30000 83497.942386
11 30000 57777.7777769
12 30000 29999.9999991
13 30000 -0.000001
 Year Deposit balance
1 10000 10950
YEARLY 2 10000 22940.25 QUATERLY MONTLY
$1,639,078.15 3 10000 36069.57 $6,776,703.31 $20,491,300.36
4 10000 50446.18
5 10000 66188.57
6 10000 83426.48
7 10000 102302
8 10000 122970.7
9 10000 145602.9
10 10000 170385.2
11 10000 197521.8
12 10000 227236.3
13 10000 259773.8
14 10000 295402.3
15 10000 334415.5
16 10000 377135
17 10000 423912.8
18 10000 475134.5
19 10000 531222.3
20 10000 592638.4
21 10000 659889.1
22 10000 733528.6
23 10000 814163.8
24 10000 902459.3
25 10000 999143
26 10000 1105012
27 10000 1220938
28 10000 1347877
29 10000 1486875
30 10000 1639078
Deposit Withdrawal Balance DIFF
2,200,000.00 200000 2200000
200000 2200000 0
200000 2200000 0
200000 2200000 0
200000 2200000 0
200000 2200000 0
200000 2200000 0
200000 2200000 0
200000 2200000 0
200000 2200000 0
200000 2200000 0
200000 2200000 0
200000 2200000 0
200000 2200000 0
200000 2200000 0
Year Deposit Withdrawal Balance DIFF
3,855,094.62 200000 4020604
210,000.00 4191664 171060.4
220,500.00 4368281 176616.4
231,525.00 4550432 182150.6
243,101.25 4738063 187631.8
255,256.31 4931088 193024.4
268,019.13 5129375 198287.7
281,420.08 5332751 203375.4
295,491.09 5540986 208234.9
310,265.64 5753792 212806.4
325,778.93 5970815 217022.4
342,067.87 6191621 220806.8
359,171.27 6415695 224073.7 Amount/(r-g)
377,129.83 6642422 226726.7
395,986.32 6871079 228657.2
415,785.64 7100823 229743.7
436,574.92 7330673 229849.9
458,403.66 7559496 228823.2
481,323.85 7785989 226493.3
505,390.04 8008659 222669.9
530,659.54 8225799 217140.4
557,192.52 8435468 209668.2
585,052.14 8635457 199989.4
614,304.75 8823267 187810.5
645,019.99 8996072 172804.8
677,270.99 9150681 154609.1
711,134.54 9283501 132820.1
746,691.26 9390491 106989.8
784,025.83 9467112 76620.71
823,227.12 9508273 41161.36
864,388.48 9508273 0
907,607.90 9460732 -47541.4
Amount/(r-g)
7.5%

-89% Year Payment Return

1 932.9 70 65.1141672
2 70 60.56935387
3 70 56.34175764
4 70 52.40923754
5 70 48.75119795
6 70 45.34848078
7 70 42.18326514
8 70 39.23897399
9 70 36.50018734
10 1002.9 486.4431982 0.075035
SUM 932.8998196

YTM 0.075035
($469.71)

> 7% Coupon rate

So, the bond is selling at discount
Year Bond A Bond B YTM PV A A B
1 2% 5% 9% 2/(1.09) COUPON 2.00 5
2 2% 5% 9% $18.26 $45.64
3 2% 5% 9%
4 2% 5% 9%
5 2% 5% 9%
6 2% 5% 9%
7 2% 5% 9%
8 2% 5% 9%
9 2% 5% 9%
10 2% 5% 9%
11 2% 5% 9%
12 2% 5% 9%
13 2% 5% 9%
14 2% 5% 9%
15 2% 5% 9%
16 2% 5% 9%
17 2% 5% 9%
18 2% 5% 9%
19 2% 5% 9%
20 2% 5% 9%
RF RISK FREE RATE

Rm Market return
Ri Expected market return

Ri=Rf+B(Rm-Rf)
 A B Weights Weights
Return 15 20 A 0.5 0.857143 0.681818
Std Dev 20 30 B 0.5 0.142857 0.318182
SR 0.75 0.666667 Sum 1 1
Portfolio Return 17.5 15.71429 16.59091
Corr 0.5 Portfolio Std. Dev 21.79449 19.63961 20.17998
Portfolio SR 0.802955 0.800132 0.822147