Reconsider the previous illustration of a P1,000 par value bond issued by MERALCO with maturity date of 2041 and a stated coupon rate of 8.5% to be paid semi- annually on January 15 and July 15. On January 1, 2021, the bond had 20 years left to maturity, and the market's required yield to maturity for similar rated debt was 7.5%. What is the value of the bond?
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- Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments 500 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments 800 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments 2,000 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments Required Assuming the market rate of interest is 10%, calculate the selling price for each bond issue.Bond Valuation with Semiannual Payments Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000, and a yield to maturity of 8.5%. What is the price of the bonds?B. Complete the information below using Bonds. Redemption Value (F) Conversion per year (m) Bimonthly Coupon Payments (k) Bond Rate (r) 11. 18% P7.50 P680 Quarterly 11% 12. P900 Quarterly 12.8% 13. P1,300 Bimonthly 12% 14. 15. Annually 15% P105.00
- Determine the market price of a $485,000, 10-year, 8% (pays interest semiannually) bond issue sold to yield an effective rate of 10%. What is the market price?Calculate the selling price of the following 5-year bond issue: e. # bonds Bond rate of interest Interest payable Market rate of interest Bond maturity (face) value 600 5.8% semi-annually 6.0% $1,000Compute the selling price of 10%, 10-year bonds with a par value of $210,000 and semiannual interest payments. The annual market rate for these bonds is 12%. Use present value Table B.1 and Table B.3 in Appendix B. (Round all table values to 4 decimal places, and use the rounded table values in calculations.) Table B.1* Present Value of 1p = 1 / (1 + i)n Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% Periods 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1 2 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 2 3 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118 0.6575 3 4 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 4 5 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 5 6 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 6 7 0.9327 0.8706 0.8131 0.7599…
- The table below shows current and expected future one-year interest rates, as woll as curent interest rates on multiyear bonds, Use the fable fo calculate the liquidity premium for each muliyear bond. IT One-Year Bond Rate Year Multiyear Bond Rate 1 2.00% 4.00% 2.00% 2. 4.00% 5.00% 7.00% 10.00% 11.00% The liquidity premiums for each year are given as (Enter lour responses rounded to bwo decimal places) 6.00% 7.00%A Interest payments per year 13 14 15 a) 16 17 18 19 20 21 22 23 24 25 26 b) B Annual Market Rate Semiannual Interest Payment: PV of Face Amount: PV of Interest Payments: + = Bond Selling Price: $500,000 15 7% 2 1 2 On January 1, Ruiz Company issued bonds as follows: 3 4 Face Amount: 5 Number of Years: 6 Stated Interest Rate: 7 8 9 Required: 10 1) Calculate the bond selling price given the two market interest rates below. 11 Use formulas that reference data from this worksheet and from the appropriate future or present value tables (found by clicking the tabs at the bottom of 12 this worksheet). Note: Rounding is not required. Annual Market Rate Semiannual Interest Payment: PV of Face Amount: + PV of Interest Payments: = Bond Selling Price: C 29 The bond in (a) sold at a: 30 The bond in (b) sold at a: 31 32 3. Use the Excel PV function to verify the selling prices of the bonds. 33 a) Annual Market Rate 34 Bond Selling Price 35 36 b) 37 Annual Market Rate Bond Selling Price 27 2. Use…A P10 000.00 bond that pays P300.00 quarterly matures in five years. Determine the discount or premium to be offered an investor who desires a yield of 14% to maturity. (Ans. Bd=P476.30)
- AS18.000 bond redeemable at par on July 09. 2013 is purchased on September 12, 2007. Interest is 7.4% payable semi-annually and the yiold is 7.9% compounded semi-annualy (a) What is the cash price of the bond? (b) What is the acorued interest? (c) What is the quoted price? (a) The cash price is S (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed) (b) The acorued interest is $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (c) The quoted price is S (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed)7. Suppose a bond is purchased with a settlement date of October 15 and the next coupon payment is on December 1. The par amount purchased on the bond is $100,000, and its annual coupon rate is 4% paid semiannually. (1) What is the accrued interest using the 30/360-day count convention? (2 points) (2) What is the accrued interest using the actual/actual day count convention? (2 points)You have the following information regarding the bond ABC. Semiannual $25 payments YTM 8% Maturity (in 4. years) Par value $1,000 Let's assume the modified duration of this bond is 4. Based on this assumption and using the modified duration, estimate the price of the bond after a 65-basis-point decrease in interest rates.