What was the IRR of your investment

Assignment Help Financial Management
Reference no: EM132000104

You purchase a 20 year bond that as a $1000 face value, 10% annual coupon and a yield to maturity of 9%.

a. What price did you purchase this bond for?

b. No assume you sell this bond immediately after the 5th coupon payment. At the time of selling, the yield to maturity is 10.5%. What price did you sell the bond for? (15 coupon payments remain)

c. What was the IRR of your investment?

Reference no: EM132000104

Questions Cloud

Compute the present value of cash flows for annuity payout : Assuming Newman can earn an 10% rate of return on any money invested during this period, compute the present value of cash flows for annuity payout.
What is the expected level of sales for the next year : What is the expected level of sales for the next year?
The company pledges to maintain constant : The company pledges to maintain a constant 0.03 growth rate in dividends forever. If the required return on the stock is 0.14, what is the current share price?
Replacement chain and equivalent annual annuity : To adjust for their life difference, you use the replacement chain and Equivalent Annual Annuity (EAA).
What was the IRR of your investment : What price did you purchase this bond for? What was the IRR of your investment?
How does the theory of ethics affect your answer : You are an executive with a large pharmaceutical company and you have to decide whether to market a product that might have undesirable side effects.
Explain the employee bill of rights : Recent events of employee dissatisfaction and general staff upheaval are threatening the continued operations of Giggle, Inc., a large internet search company.
Topic-aggregate demand and supply : Question: If the Price level rises does consumption (C) increase? This is relating to the Wealth Effect.
What is the meaning of standard deviation : What is the meaning of standard deviation? And within 2 standard deviation, what percentage fall in?

Reviews

Write a Review

Financial Management Questions & Answers

  Yield to call-yield to maturity and market rates

Absalom Motors's 14% coupon rate, semiannual payment, $1,000 par value bonds that mature in 25 years are callable 6 years from now at a price of $800. The bonds sell at a price of $1,150, and the yield curve is flat. Assuming that interest rates in t..

  What will its dollar profit be from speculation

Baylor Bank believes the New Zealand dollar will appreciate over the next five days from $.48 to $.50.

  Calculate the companys weighted-average cost of capital

The expected rate of return on the shares is 12%. Calculate the opportunity cost of capital for an average-risk Whispering Pines investment. Next, suppose the company issue debt, repurchases shares, and moves to a 30% debt to value ratio (D/V=.30). C..

  What amount of safety stock would provide a stock out risk

The injection molding department of a company uses an average of 30 gallons of special lubricant a day. The supply of the lubricant is replenished when the amount on hand is 170 gallons. It takes four days for an order to be delivered. Safety stock i..

  Importance of the time value of money concepts

Define and discuss the importance of the time value of money concepts, including compounding (future value), discounting (present value), and annuities.

  If market interest rates rises

If market interest rates rises?

  Calculate fair fixed-rate for three-year plain

Calculate a fair fixed-rate for a 3-year plain-vanilla interest rate swap with annual settlement dates

  Operating assets is considering the purchase of a machine

A company with $825,000 in operating assets is considering the purchase of a machine that costs $87,000 and which is expected to reduce operating costs by $19,000 each year. These reductions in cost occur evenly throughout the year. The payback perio..

  Ganado and equity risk premiums

Ganado and Equity Risk Premiums. Maria? Gonzalez, Ganado's Chief Financial? Officer, estimates the? risk-free rate to be 3.00 % the? company's credit risk premium is 3.60?%, the domestic beta is estimated at 1.12?, the international beta is estimated..

  Unsalable inventory-uncollectible accounts receivable

Financial statement analysis can be used to identify weaknesses in a firm’s operations. Uncollectible accounts receivable – you could compare the firm’s average collection period to other peer firms and look for trends over time that might suggest de..

  How does reinvestment affect both NPV and IRR

How does this profile compare to that of internal rate of return (IRR)? How does reinvestment affect both NPV and IRR?

  What is the sustainable rate of growth

Stop and Go has a 4.5 percent profit margin and a 15 percent dividend payout ratio. What is the sustainable rate of growth?

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