# Planning for the Future How you spend and invest your money can have an impact on your lifestyle at a later time. What might you want to start saving for.

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Planning for the Future How you spend and invest your money can have an impact on your lifestyle at a later time. What might you want to start saving for in the near future?

Lesson Objective Compute the annual interest and annual yield of a bond investment. Content Vocabulary mutual fund A kind of investment offered by an investment company, which accumulates the saving of many individuals and invests them in a portfolio of stocks, bond, or both.

George Vanderhill purchased a \$1,000 bond at the quoted price of 89½. The bond paid interest at a rate of 6 percent. Find the interest, the cost of the bond, and the annual yield. Example 1

Find the annual interest. Face Value × Interest Rate \$1,000.00 × 6% = \$60.00 Example 1 Answer: Step 1

Find the bond cost. Face Value × Percent \$1,000.00 × 89½% = \$895.00 Example 1 Answer: Step 2

Find the annual yield. Annual Interest Bond Cost \$65 = 0.072625 or 7.26% \$895 Example 1 Answer: Step 3

A \$50,000 bond from Bayview at 103 pays 5 percent annual interest. a.What is the annual interest? b.What was the cost of the bond? c. What is the annual yield? Practice 1

a.\$2,937.50 b.\$51,500 c. 5.7% Practice 1 Answer

Amy Wendell purchased four \$10,000 bonds at 95.75. The bonds pay an annual interest rate of 6 percent. Practice 2

Practice 2 (cont.) a.What is the total cost of the purchase? b.What will be her yearly total interest earnings? c.What is the annual yield?

a.\$38,300 b.\$2,750 c.7.18% Practice 2 Answer

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