Calculate present value-current yield-interest rates bonds, Financial Accounting

Assignment Help:

Present Value of a Bond

1. Assume that you wish to purchase a 20 year bond that has a maturity value of $1,000 and makes semiannual interest payments of $40.  If you require a 10% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

Current Yield of a Bond

2. Consider a $1,000 par value bond with a 7% annual coupon.  The bond pays interest annually.  There are 9 years remaining until maturity.  What is the current yield on the bond assuming that the required return on the bond is 10%?

Change in Interest Rates of Bond

3. A bond has a $1,000 face value, coupon rate of 7% with semiannual payments.  Assume that the investors require a rate of return of 8%, what is the present value of the bond?  Consider now that the investors require a rate of return of 10%, what is the new present value of the bond?  Assume there are 10 years remaining until maturity.

 

 

 

 


Related Discussions:- Calculate present value-current yield-interest rates bonds

Repayment of principal, a) Your company is planning to take $1,750,000 on a...

a) Your company is planning to take $1,750,000 on a 3-year, 10%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will sho

Record the estimated bad debts expense, At year-end (December 31), Chan Com...

At year-end (December 31), Chan Company estimates its bad debts as 0.30% of its annual credit sales of $753,000. Chan records its Bad Debts Expense for that estimate. On the follow

Home work, 1. The acceptance of a capital budgeting project is usually eval...

1. The acceptance of a capital budgeting project is usually evaluated on its own merits. That is, capital budgeting decisions are treated separately from capital structure decision

Various fields of accounting and how do they differ, 1.what are the various...

1.what are the various fields of accounting and how do they differ? 2. how are revenues and expenses affect the owners' equity account? 3. why are revenues and expenses recor

Prepare a partial balance sheet, On December 31, 2014, Santana Company has ...

On December 31, 2014, Santana Company has $7,194,600 of short-term debt in the form of notes payable to Golden State Bank due in 2015. On January 28, 2015, Santana enters into a re

Adjusting Entry for these Accounting statements?, In June 2012 Company has ...

In June 2012 Company has supplied some goods to a customer on a sale on return basis. The value of the goods was Rs. 120,000. The company recorded this transaction as credit sale,

Application of discharge-discharge of bankrupt, Application of discharge ...

Application of discharge Application may be made at any time after adjudication, but cannot be heard until the conclusion of the public examination. Notice of the hearing must

Trade credit, Trade credit creates accounts or debtors receivables. Trade c...

Trade credit creates accounts or debtors receivables. Trade credit is utilized as a marketing tool to expand competitive advantage over trade rivals. A firm's investment in account

Net investment and single net cash flow, Would you invest in a project that...

Would you invest in a project that has a net investment of $14,600 and a single net cash flow of $24,900 in 5 years, if your required rate of return was 12 percent?

Powers of trustee-rights and duties of trustee, Powers of trustee (A) ...

Powers of trustee (A) Of his own initiative, he may: 1.    Sell and transfer any part of the bankrupt's property; 2.    Gives receipts for money received; 3.    Take all n

Write Your Message!

Captcha
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