query regarding invest returns on 5 year bond?

Question

if i invest a 1000 pounds in a 5 year fixed bond and it gurantees a net return of 4per cent a year at the end of the 5 years how much will ihave made assuming allincome is reivested

Answer 1

1216.65 pounds

To determine this yourself, take the principal (P) times the annual interest rate (R) raised to the number of years you want to hold the investment (t):

P * R^t

(you only raise R to the t, not P*R)

Answer 2

You actually do have enough information -- ufukguc is probably an American who doesn't know that bonds in the UK pay annually. Bonds in the US pay twice per year.

Annual compounding gives you the value that augmom gave you (1216.65). If it were invested in US Bonds at 4%, then you would get semiannual compounding and the future value would be 1218.99.

Answer 3

hi In India there are none which offer this go back till & till it truly is linked with marketplace and probability component is likewise there in this link . there became a postal insurance coverage which lasted till eventually previous due ninety's it became giving the double volume as go back that you requested on your question it became later withdrawn , it became Indira Kisan Vikas Pathra which does no longer exist now. The PPF is now presently giving the extreme returns that are reliable and authorities certain round 8% compounded pastime. The nationalised banks do furnish some better pastime those days for a locking era of 5 years in spite of the indisputable fact that it does no longer be compounded pastime it's going to be in accordance to hassle-free pastime. no matter if it really is you difficult earned funds again after a particular era of employment it could be better suited to deposit fifty 5 % in PPF and relax in nationalised economic employer like State economic employer of India or its communities banks with a unit/marketplace linked plan connected with it a 20 % of a few thing of volume ,so those supply a reliable and conserving income for destiny with a lot less probability.

Answer 4

You need more information to answer this question accurately. First of all, do you receive coupons semiannually (i.e. every 6 months) or annually? At what rate do you re-invest the coupons? The answer changes quite a lot according to these specifications...

Answer 5

normally interest on bonds is not reinvestible in the bonds. In fact I do not know of any that is. But assuming that it is and the interest is paid semi annually which normally it is, the the answer is 1218.99 pounds disregarding taxes, which should not be disregarded.

Answer 6

wwwwwwwwwwwwwwwwwwwwwwwweeeeeeeeeeeeeeeird, but you'd get $50,000