1) Jenna is planning to retire and would like to set up an income fund so that she will be able to withdraw $2000 each month for the next 10 years

1) We can calculate the present value by using the following formula in excel:-

=-pv(rate,nper,pmt,fv)

Here,

PV = Present value

Rate = 3.25%/12 = 0.27083% (monthly)

Nper = 10*12 = 120 periods (monthly)

Pmt = $2,000

FV = $0

Substituting the values in formula:

= -pv(0.27083%,120,2000,0)

= $204,668.82

2) We can calculate the yield to maturity by using the following formula in excel:-

=rate(nper,pmt,-pv,fv)

Here,

Rate = Yield to maturity (semiannual)

Nper = 10*2 = 20 periods (semiannual)

Pmt = Coupon payment = $1,000*8%/2 = $40

PV = $1,100

FV = $1,000

Substituting the values in formula:

= rate(20,40,-1100,1000)

= 3.31%

Yield to maturity = Rate * 2

= 3.31% * 2

= 6.62%

We can calculate the yield to call by using the following formula in excel:-

=rate(nper,pmt,-pv,fv)

Here,

Rate = Yield to call (semiannual)

Nper = 5*2 = 10 periods (semiannual)

Pmt = Coupon payment = $1,000*8%/2 = $40

PV = $1,100

FV = Call value = $1,050

Substituting the values in formula:

= rate(10,40,-1100,1050)

= 3.24%

Yield to call = Rate * 2

= 3.24% * 2

= 6.49%