User Account

All Pages

Semiannual interest payments

Assignment Help Finance Basics
Reference no: EM131933066

Please show work

1. Corporation sold a 25-year, 12% annual coupon bond at a par value of $1,000 in April 2007. In April 2017, the bond's yield to maturity (YTM) is 10%. What is the value or Present Value or Vb of the bond? 

Present Value = pv(rate, nper,pmt,fv)

Nper  (indicates the period) = 25

PV (indicates the price) = ?

PMT (indicate the annual payment) = 1000*12% = 120

FV (indicates the face value) = 1000

Rate (indicates YTM) = 10%

Present Value = pv( 10%,25,120,1000)

Present Value = $ 1375.00

2. Now assume the same bond as above but with semiannual interest payments. What is the value or (PV) or (Vb) of the bond. 

Present Value = pv(rate, nper,pmt,fv)

Nper  (indicates the period) = 25*2 = 50

PV (indicates the price) = ?

PMT (indicate the semi annual payment) = 1000*12%*1/2 = 60

FV (indicates the face value) = 1000

Rate (indicates YTM) = 10%*1/2 = 5%

Present Value = pv( 5%,50,60,1000)

Present Value = $ 1376.00

3. The Kalodop Corporation issues 11% annual coupon bonds that pay $1,000 at maturity. These bonds mature in 10 years. What is the value (PV) or (Vb) of the bonds if the current or market or prevailing or going or YTM is 9%. 

4. Now assume that the current or market or prevailing or going or YTM rate is 12% on the bond in #3 above. What is its Vb or PV?

5. Now assume that the current or market or prevailing or going or YTM rate is 8% on the bond in #3 above. What is its Vb or PV?

Reference no: EM131933066

Questions Cloud

What will be the size of payment : Instead of taking $700,000 from an inheritance right now, a person decides to take 60 monthly payments with the first payment to be made immediately.
How much of the inspecting cost pool should be assigned : One of Matheny Company's activity cost pools is inspecting, with estimated overhead. How much of the inspecting cost pool should be assigned to throw rugs?
Find the size of the quarterly payment : Payments may be made quarterly in advance with interest at 6% compounded quarterly. Find the size of the quarterly payment.
Explain the porters 5 competitive forces : Porter's 5 Competitive Forces, what do you believe is a limitation to only evaluating those competitive forces for that selected industry/company.
Semiannual interest payments : Now assume the same bond as above but with semiannual interest payments. What is the value or (PV) or (Vb) of the bond.
Find what are the npv and irr of the project : Anderson International Limited is evaluating a project in Erewhon. The project will create the following cash flows.
Compute amelie deduction : Amelie is an employee who uses her personal automobile in connection with her job. Compute Amelie's deduction before the 2% of AGI floor
How much will he be able to withdraw each year : Your great-uncle Claude is 82 years old. Over the years, he has accumulated savings of $80,000. He estimates that he will live another 10 years
What type of assurance is provided on financial statements : What type of assurance is provided on financial statements prepared a special purpose basis of accounting other than generally accepted accounting principles?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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