How early do you recommend people being saving for retirement? Would it be too early for my 14-year-old to start saving?Comment

Comment on the “experts'” response to the following questions:

Question: How early do you recommend people being saving for retirement? Would it be too early for my 14-year-old to start saving?

Expert: It is never too early.

Question: For a college student, would would you suggest for a savings plan?

Expert: I would suggest deciding on a specific amount to set aside each month, then making sure you do it, no matter how great the temptations not do.

Klondike Adventure, Inc., has outstanding $100 million bonds that pay an annual coupon rate of interest of 11 percent. Par value of each bond is $1,000. The bonds are scheduled to mature in 10 years. Because of Dooley’s increased risk, investors now require a 13 percent rate of return on bonds of similar quality. The bonds are callable at 110 percent of par at the end of 5 years.

What price would the bonds sell for assuming investors do not expect them to be called?
Hint: nper = 10 years, fv = 1000)
What price would the bonds sell for assuming investors expected them to be called at the end of 5 years?
Hint: nper = 5, fv = 1100
Excel hints:

Review the time line and cash flow amount for the regular and callable bond.
PV(rate = discount rate for each period, nper = # of coupons, pmt = coupon, fv = par, type = 0)