What is the present value of this bond

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Question - For purposes of this exercise, assume that UPS issues a new ten-year bond for $100,000 (Face Value) that will mature in 2027 (10-Years). The Future Value of this bond is therefore $100,000. The bond was issued in December 2017 at a market interest rate of 5.0% fixed for 10 years, with interest payments made semi-annually (Note: The payment never changes even if the original rate of 5% increases or decrease). What is the Present Value of this bond using the three scenarios in Part II: Bond Issuance.

Assuming this company already has bonds outstanding, calculate the following:

1. The new value of the bond if overall rates in the market increased by 2%.

2. The new value of the bond if overall rates in the market decreased by 2%.

3. The value of the bond if overall rates in the market stayed exactly the same.

Reference no: EM132983882

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