Calculate the value of the bond

Assignment Help Finance Basics
Reference no: EM132396540

You own a bond that pays $110 in annual? interest, with a ?$1,000 par value. It matures in 10 years. Your required rate of return is 12 percent.

a. Calculate the value of the bond.

b. How does the value change if your required rate of return? (1) increases to 14 percent or? (2) decreases to77 ?percent?

c. Explain the implications of your answers in part ?(b?) as they relate to interest rate? risk, premium? bonds, and discount bonds.

d. Assume that the bond matures in 33 years instead of 10 years. Recompute your answers in part (b?).

e. Explain the implications of your answers in part (d?) as they relate to interest rate? risk, premium? bonds, and discount bonds.

Reference no: EM132396540

Questions Cloud

Discuss organization or brand giving your classmates : Discuss the organization or brand giving your classmates a view details about why you feel it is a monopoly
Discuss importance of trends in population health management : Discuss the importance of trends in epidemiology and population health management. Be 2 pages in length, not including the required cover and reference page.
Cournot equilibrium and duopoly problems in microeconomics : How to do Cournot Equilibrium and duopoly problems in Microeconomics - Inverse Demand Function and What is Optimal Price P1* And Optimal Profit ?1* for duopolis
ECMT2130 Financial Econometrics- Assignment Problem : ECMT2130 Financial Econometrics Assignment Help and Solutions- University of Sydney Australia- calculate continuously compounded returns for the ten stocks.
Calculate the value of the bond : You own a bond that pays $110 in annual? interest, with a ?$1,000 par value. It matures in 10 years. Your required rate of return is 12 percent.
Dominant microprocessor company intel adapts to next trend : After reading the section titled "Dominant Microprocessor Company Intel Adapts to Next Trend" "2018-2019 Intel Corporate Responsibility Report.
What difficulties might you face in applying the theory : Discuss a motivation theory you would use from Chapter 10 in Management of Healthcare Organizations to implement change and work toward resolving this issue.
State laws regarding notifying customers of data breaches : Discuss the reasons why we have a hodge-podge of different state laws regarding notifying customers of data breaches.
Describe your experience using impression of coding : Describe your experience using the manual and your impression of coding. Why is coding necessary in health insurance? Be 2 pages in length, not including the.

Reviews

Write a Review

Finance Basics Questions & Answers

  Classify each of the above accounts as a financing activity

the fair view golf amp country club details the following accounts in its financial statements.abaccounts

  Calculate amir monthly payment

Calculate Amir's monthly payment. Calculate the principal owning at the end of the 5 year term

  What is the corporations tax-adjusted basis in each of the

The corporation also assumed a mortgage of $100,000 attached to the building and land.  The fair market value of the corporation’s stock received in the exchange was $300,000.  The transaction met the requirements to be tax-deferred under §351.

  Depreciation schedule using straight-line depreciation

a. Calculate the depreciation schedule using straight-line depreciation. b. Calculate the depreciation schedule using MACRS depreciation. c. Calculate the after-tax salvage value of the machine if the straight line depreciation method is used.

  How many years will it take to exhaust his funds

Your father has $540,000 invested at 7.3%, and he now wants to retire. He wants to withdraw $50,000 at the beginning of each year, beginning immediately. How many years will it take to exhaust his funds, i.e., run the account down to zero?

  What percentage of students at the college

What percentage of students at the college have a GPA between 2 and 3.2?? Round to the nearest percent.

  What is the project npv

What is the project's NPV? Note, the tax on the sale at year 8 should reflect the following: the original cost lessall depreciation gives a new basis. That basis is subtracted from the sales price.

  Calculate the present value of the depreciation tax shield

Calculate the present value of the depreciation tax shield for an asset in the 3-year class life costing $100,000. Three-year class percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively for years 1 through 4.

  Compute the mean return beta and standard deviation

How does your answer to part a change if the debt is risky, has returns with a mean of 7 percent, has a standard deviation of 10 percent, a beta of .2, and has a correlation of .3 with the return of the common stock of Alumina?

  Problem regarding the ebit-eps analysis

Abe Forrester and three of his friends from college have interested a group of venture capitalists in backing their business idea. The proposed operation would consist of a series of retail outlets to distribute and service a full line of vacuum c..

  Computation of eps

Computation of EPS and I want to compute the degree if operating leverage and financial leverage and the combined leverage

  What debt-equity ratio is needed for the firm

Central Systems, Inc. desires a weighted average cost of capital of 8 percent. The firm has an after-tax cost of debt of 6 percent and a cost of equity of 11 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted a..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd