Reference no: EM133061404
You are considering an investment in the bonds of the Front Range Electric Company. The bonds pay interest semiannually, will mature in 15 years, and have a coupon rate of 6% on a face value of $1,000. Currently, the bonds are selling for $920.
Can you please show excel functions on how to do these?
a. If your required return is 6.80% for bonds in this risk class, what is the highest price you would be willing to pay? (Use the PV function)
b. What is the current yield of these bonds?
c. What is the yield to maturity on these bonds if you purchase them at the current price? (Use the Rate function)
d. If you hold the bonds for one year, and interest rates do not change, what total rate of return will you earn, assuming that you pay the market price? Why is this different from the current yield and YTM?
e. If the bonds can be called in three years with a call premium of 4% of the face value, what is the yield to call? (Use the Rate function)
f. Now assume that the settlement date for your purchase is 07/30/2020, the price maturity date is 07/30/2035, and the first call date is 07/30/2023. Using Price and Yield recalculate your answers to parts a, c, and d.
g. If market interest rates remain unchanged, do you think it is likely that the bond will be called in three years? Why or why not?
h. Make a chart that shows the relationship of the bond's price to your required return. Use a range of 0% to 15% in calculating the prices.
Please show excel functions for the questions above, Need solution in excel
|
Prepare the journal entry to record Windsor transaction
: Windsor Corp. has issued 13,000 units. Each unit consists of a $650 par, Prepare the journal entry to record Windsor's transaction
|
|
Implications minimum tax rate
: On October 9th 2021, 130 countries all over the world agreed to impose a global minimum corporate tax rate of 15 percent, aiming to deter MNCs from exploiting l
|
|
Equity value and debt-to-value ratio
: What are the equity value and debt-to-value ratio if the company's growth rate is 3 percent?
|
|
One year risk-free rate with continuous compounding
: Currently, Gold spot market price is S0Explain why there is no arbitrage profit. = $1,600/ounce. The one year gold futures on NYMEX trades for F0,1 = $1,724.614
|
|
What is the current yield of bonds
: You are considering an investment in the bonds of the Front Range Electric Company. The bonds pay interest semiannually, will mature in 15 years, and have a cou
|
|
What are the total equivalent units for conversion costs
: The ending work in process inventory on October 31 was 4,368 tons (20% complete). What are the total equivalent units for conversion costs
|
|
What is the expected rate of return
: 1) The risk-free rate is 6 percent and the expected market return is 15 percent. An investor sees a stock with a beta of 1.2 selling for $25 that will pay a $1
|
|
Prepare a contribution margin income statement for next year
: Prepare a contribution margin income statement for the next year assuming the company incurs the additional advertising costs
|
|
Homeland and balancing privacy and civil liberties
: Discuss the challenges associated with protecting the homeland and balancing privacy and civil liberties. Is there a conflict that exists between the law,
|