"AST1CAL3 EQUATION VARIABLE","08-31-1993","18:34:51"
"ANNRATE%=200*(EXP(LOG(FACEVAL/PURPRICE)/(2*TERMYRS))-1) EFFRATE%=RND(100*((1+ANNRATE%/200)^2-1)) PRESVAL=RND(PURPRICE*(1+ANNRATE%/200)^(2*YEAR#)) INTRPAID=PRESVAL-RND(PURPRICE*(1+SIGN(FIX(YEAR#))*ANNRATE%/200)^(2*(YEAR#-1)))"
"ZERO COUPON BONDS. FINANCING A COLLEGE EDUCATION.              A zero coupon bond is a bond without a nominal interest rate that pays its      nominal or face value FACEVAL at maturity in TERMYRS years.  It is similar to a treasury bill because it is purchased at a price PURPRICE which has a steep     discount from its face value.  'Interest' payments are usually added to the     present value twice each year (semiannually).  Because it lacks a nominal       interest rate, for tax purposes, one must calculate a yearly interest throughoutits lifetime of TERMYRS. In the following treatment a nominal annual, or simple,interest rate ANNRATE% is calculated for the 'zero' assuming that the purchase  price will grow to the face value with semiannual compounding. EFFRATE% is the  effective rate.  PRESVAL is the present value of the 'zero' at the end of a     given year YEAR#. INTRPAID is the amount of interest for year YEAR# that one    should report as income.   Type any key to exit.    (c) PCSCC, Inc., 1993       *** Answers to Problems ***                                                     (a) Set FACEVAL=60,000, PURPRICE=16,325, TERMYRS=18 and YEAR#=0.5, the interest paid is estimated as $601.06.                                                   (b) Set YEAR#=1.5, the interest paid is now estimated at $1269.33.                             ||Mr. Jones estimates that he will need $60,000 to pay for his   newly-born daughter's college education in 18 years.  He purchases 60 $1,000    'zeros' which mature in 18 years on the open market for $16,325 on July 1st.    (a) What should he report as interest income for the first year YEAR#=0.5?      (b) What must he report as interest income for the second year (YEAR#=1.5)?     Type comma key to see answers.  Type (F2) to return to application file."
8
7.363693396087967,0,""
7.5,0,""
16926.06,0,""
601.0599999999999,0,""
60000,0,""
16325,0,""
18,0,""
.5,0,""
1
0
0