What is maximum price you should be willing to pay for bond

Assignment Help Financial Management

Reference no: EM13875951

You are considering the purchase of a 20-year, non callable bond with a coupon rate of 9.0%. The bond has a face value of $1,000, and it makes semi annual interest payments. If you require an 12% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

1. $699.07

2. $811.92

3. $891.95

4. $774.31

5. $916.50

Reference no: EM13875951

Questions Cloud

Considering new three-year expansion project : Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.82 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. What is the projec..

Importance of equal pay between men and women : Using the e-Activity, determine the importance of equal pay between men and women. Then, suggest two (2) valid reasons why their pay may be different for the same position. Justify your response

Evaluating two different silicon wafer milling machines : You are evaluating two different silicon wafer milling machines. The Techron I costs $261,000, has a three-year life, and has pretax operating costs of $70,000 per year. The Techron II costs $455,000, has a five-year life, and has pretax operating co..

Finding annuity payments-periods and interest rates : You have $51,501.70 in a brokerage account, and you plan to deposit an additional $7,500 at the end of every future year until your account totals $425,000. You expect to earn 8.4% annually on the account. How many years will it take to reach your go..

What is maximum price you should be willing to pay for bond : You are considering the purchase of a 20-year, non callable bond with a coupon rate of 9.0%. The bond has a face value of $1,000, and it makes semi annual interest payments. If you require an 12% nominal yield to maturity on this investment, what is ..

Number of periods of a single payment : If you deposit money today in an account that pays 8.5% annual interest, how long will it take to double your money? Round your answer to the nearest whole number

Interest rate on single payment : Your parents will retire in 14 years. They currently have $300,000, and they think they will need $1 million at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds?

Semi annual bonds outstanding-what is the yield to maturity : Signature Sweets, Inc. has 10 percent semi annual bonds outstanding with 20 years to maturity. The latest quote on these bonds is 120.00 percent of the face value. What is the yield to maturity?

Money in other investments with equal risk : You have a chance to buy an annuity that pays $10,000 at the beginning of each year for 10 years. You could earn 5.75% on your money in other investments with equal risk. What is the most you should pay for the annuity?

User Account

All Pages