Tesla's bond pays $ 70 in annual interest, with a $ 1,000 par value. The bond matures in 17 years. The market's required yield to maturity on a comparable-risk bond is 8.5%. Calculate the value of the bond. a. $1,067.62 b. $ 967.62 c. $ 867.62 d. $ 767.62

Tesla's bond pays $ 70 in annual interest, with a $ 1,000 par value. The bond matures in 17 years. The market's required yield to maturity on a comparable-risk bond is 8.5%. Calculate the value of the bond. a. $1,067.62 b. $ 967.62 c. $ 867.62 d. $ 767.62

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: (Related to Checkpoint 9.2) (Yield to maturity) The market price is $800 for a 9-year bond ($1,000…

A: Bonds are a type of debt financing instrument, which are issued by a company to the investors in…

Q: Graystone bonds have a maturity value of $1,000. The bonds carry a coupon rate of 12 percent.…

A: Yield to maturity:A financial measure called Yield to Maturity (YTM) evaluates the overall return…

Q: Tangshan Industries has issued a bond which has a $1,000 par value and a 15 percent annual coupon…

A: The yield to maturity refers to the return that the investor earns if they hold the bond till its…

Q: ACT has an outstanding bond with a face value ( principal) of 1,000which would mature in 10 years.…

A: Current market value = present value of all future cash flows Here FV = 1000; nper (or time…

Q: The 13-year $1 comma 000 par bonds of Vail Inc. pay 12 percent interest. The market's required yield…

A: Given: Current Price 890Coupon Rate12%Face Value1000Years 13

Q: The Gab corporation bonds are currently selling in the market. These bonds have 7 years left to…

A: The problem is asking us to calculate the current market price of a bond. The bond has a coupon rate…

Q: Ninja Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon…

A: Par value of the bond is $1,000. Maturity is 10 years. Annual coupon payment is $70. Required…

Q: A firm issues a $10 million bond with a 7% coupon rate, 4 year maturity, and annual interest…

A: Premium on bonds = present value - issued bonds.Interest expense = (issue bonds *coupon rate*Year…

Q: A bond of Telink Corporation pays $120 in annual interest, with a $1,000 par value. The bonds…

A: Here, Annual coupon payment = $120 Par Value = $1,000 Time period = 15 years Yield to maturity = 8%…

Q: Fingen's 12 yr, $1000 par value bonds pay 9% interest annually. The market price of the bonds is…

A: Time = t = 12Face Value = fv = $1000Coupon Rate = c = 9%Current Price of Bond = pv = $1110Required…

Q: 15-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate of…

A: A bond is a kind of debt security issued by the government and private companies for raising funds…

Q: The 7-year $1,000 par bonds of Vail Inc. pay 9% interest. The market’s required yield to maturity on…

A: Bond :— Bond are Debt instruments and represent Loans Make to the issuer. government and Corporate…

Q: 14year

A: A. To compute the bond's yield to maturity, we need to find the rate at which the present value of…

Q: (Yield to maturity) Assume the market price of a 5-year bond for Margaret Inc. is $1,025, and it has…

A: Market price of bond = $1025Face value = $1000Coupon rate = 8%Maturity = 5 yearsTo find: YTM of the…

Q: quired yield to maturity on a comparable-risk bono 10 percent. Compute the bond's yield to maturity.…

A: Yield to maturity is the rate of return realized on bond when bond is held till maturity of bond and…

Q: Mature in 7 years, have a face value of $1,000, and make an annual coupon interest payment of $60.…

A: P0 = Price of the bond C = Annual coupon amount i.e. $60 r = Yield to maturity i.e. 0.08 n =…

Q: The face Value of the 8.5% bond is $1,000 with a maturity period of 5 years. The bond is selling…

A: Given: Coupon rate = 8.5% Face value = $1,000 Years =5 Current price = $943.15 Yield to maturity =…

Q: (Yield to maturity) The market price is $1,100 for a 9-year bond ($1,000 par value) that pays 9…

A: Market price = $1100 Par value = $1000 Coupon rate = 9% Semi annual coupon amount = 1000*0.09/2 =…

Q: You are interested in purchasing two bonds. Bond A: 15-year $1,000,000 bond, redeemable at 102.5,…

A: We have to prepare the bond amortization schedule. When a bond is priced at premium or discount,…

Q: a. Compute the bond's yield to maturity. b. Determine the value of the bond to you, given your…

A: Bond valuation determines the present value of a bond's future cash flows, which include the…

Q: A bond with 18 years to maturity has an annual interest payment of $30. If the bond sells for its…

A: Let the face value be $1000 therefore price of the bond =$1000 using excel rate function current…

Q: A ten-year 100 face amount bond has an annual coupon rate of 8% payable semiannually. The bond is…

A: Bond price at an effective annual rate of 6% and different maturity of 5,7 and 9 years is…

Q: Fingen's 18-year, $1 comma 000 par value bonds pay 9 percent interest annually. The market…

A: Yield to maturity of a bonds refers to the rate of return that the bond holder will earn if he holds…

Q: The 18-year, $1,000 par value bonds of Waco Industries pay 6 percent interest annually. The market…

A: Given information,Number of years: yearsPar value: Coupon rate: Market price: Market yield: To…

Q: ercent. The annual par

A: and the face value (or the redemption value) Here given that Face value = 1000, coupon %=6%, So…

Q: (Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation) Fingen's 12-year, $1,000 par value…

A: Bond price is the sum of interest payments and maturity value discounted at yeild to maturity Bond…

Q: A bond is sold at a face value of $200 with an annual yield of 3%. How much will the bondholder have…

A: Bonds are the liabilities of the company which is issued to raise the funds required to finance the…

Q: K The Sisyphean Company has a bond outstanding with a face value of $5,000 that reaches maturity in…

A: Face value or maturity value = Z = $5,000Semiannual coupon amount = C = $205 (i.e. $5000 * 0.082 /…

Q: Bond X is issued by the company two years with 12 years to maturity. The coupon rate is 10% and…

A: We are given the following data :Years to maturity : 12 Coupon rate : 10%Yield to maturity : 12%Par…

Q: (Bond valuation) National Steel's 20-year, $1,000 par value bonds pay 9 percent interest annually.…

A: Bond price refers to the discounted value presently of the future cash flow generated by the bonds…

Q: Suppose that a company issues $10000 face value discount bond maturing in one year.What is the price…

A: The bond is a fixed-income debt security. The current price of the bond is the discounted value at a…

Q: A bond with a face value of $10,000 pays $600 in interest annually and matures in 1 year. The bond…

A: A bond is a fixed-income security that allows the investor to receive periodic coupon payments…

Q: bond

A: a. Using the given information, we can calculate the value of the bond using the following formula:…

Q: The 12-year $1 comma 000 par bonds of Vail Inc. pay 13 percent interest. The market's required yield…

A: Bond valuation refers to a method which is used to compute the current value or present value (PV)…

Q: You need to know the yield to maturity on your company’s debt. The quoted bond price is 103.425, the…

A: A bond is a kind of debt security issued by the government and private companies for raising funds…

Q: A corporate bond has a face value of $1,000, and pays a $14 coupon semiannually (that is, the bond…

A: Variables in the question :Face value=$1000Coupon rate=2.8% (paid semi-annually)N=6…

Q: San Miguel Company's 18-year, $1,000 par value bonds pay 6.5 percent interest annually. The market…

A: A bond is a debt instrument that allows the issuer to raise funds from the public. The bond's issuer…

Q: dorin Company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon…

A: The bonds are debt financial instruments issued by corporations and governments for raising debt…

Q: Tom Inc. bonds mature in 8 years, have a par value of $1,000, and make an annual coupon interest…

A: Par value (FV) = $1000 Annual coupon amount (C) = 65/2 = $32.50 Years to maturity = 8 Years Number…

Q: There is a bond that has a quoted price of 94.941 and a par value of $2,000, The coupon rate is 6.54…

A: Bonds are debt instruments issued by companies. The company that issues the bond pays periodic…

Q: (Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation) Fingen's 14-year, $1,000 par value…

A: A Bond refers to a concept that is defined as an instrument that represents the loan being made by…

Q: (Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation) Fingen's 19-year, $1,000 par value…

A: When the bondholder is interested in understanding the worthiness of an asset based on the PV of its…

Q: Ninja Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon…

A: A financial instrument that doesn’t affect the ownership of the common shareholders or management of…

Q: the Saleemi Corporation's $1,000 bonds pay 11 percent interest annually and have 12 years until…

A: YTM is also known as Yield to maturity. It is a capital budgeting technique which helps in decision…

Q: A $1,000 par value bond matures in 11 years, pays interest semiannually, and has a 6.5 percent…

A: Solution:-Yield to maturity means the rate of return that the bond holder will earn if the bond is…

Q: The 7-year $1,000 par bonds of Vail Inc. pay 8 percent interest. The market’s required yield to…

A: Hi there, Thanks for posting the questions. As per our Q&A guidelines, the solution for first…

Question

100%

a. $1,067.62

b. $ 967.62

c. $ 867.62

d. $ 767.62

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Working note #:-

VIEW

Step 3: Working note #2:-

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation) Fingen's 16-year,1000 $ par value bonds pay 13 percent interest annually. The market price of the bonds is $1070 and the market's required yield to maturity on a comparable-risk bond is 14 percent. a. Compute the bond's yield to maturity. b. Determine the value of the bond to you, given your required rate of return. c. Should you purchase the bond? a. What is your yield to maturity on the Fingen bonds given the market price of the bonds? % (Round to two decimal places.)
The Saleemi Corporation's $1,000 bonds pay 5 percent interest annually and have 13 years until maturity. You can purchase the bond for $865. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 8 percent?
еВook Harrimon Industries bonds have 5 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%. a. What is the yield to maturity at a current market price of 1. $822? Round your answer to two decimal places. % 2. $1,107? Round your answer to two decimal places. % b. Would you pay $822 for each bond if you thought that a "fair" market interest rate for such bonds was 13%-that is, if ra = 13%? I. You would not buy the bond as long as the yield to maturity at this price is less than the coupon rate on the bond. II. You would buy the bond as long as the yield to maturity at this price is greater than your required rate of return. III. You would buy the bond as long as the yield to maturity at this price is less than your required rate of return. IV. You would buy the bond as long as the yield to maturity at this price equals your required rate of return. You would not buy the bond as long as the yield to maturity at this price is…
ort A 16-year bond has a 10 percent annual coupon, a yield to maturity of 5 percent, and a face value of $1,000. What is the price of the bond? $1,511.89 $1,521.89 $1,531.89 $1,541.89 O $1.501.89
Vijay shiyal
Please explain both a and b
the 15-year $1,000 par bonds of Vail Inc. pay 15 percent interest. The market's required yield to maturity on a comparable - risk bond is 18 percent. The current market price for the bond is $910. a. determine the yield to maturity b. what is the value of the bonds to you given the yield to maturity on a comparable - risk bond? c. should you purchase the bond at the current market price?
Calculate the yield to maturity on the following bonds: A 9.4 percent coupon (paid semiannually) bond, with a $1,000 face value and 19 years remaining to maturity. The bond is selling at $965. An 8.4 percent coupon (paid quarterly) bond, with a $1,000 face value and 10 years remaining to maturity. The bond is selling at $901. An 11.4 percent coupon (paid annually) bond, with a $1,000 face value and 6 years remaining to maturity. The bond is selling at $1,051. (For all requirements, do not round intermediate calculations. Round your percentage answers to 3 decimal places.
arrimon Industries bonds have 4 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%. What is the yield to maturity at a current market price of 1. $8617 Round your answer to two decimal places. % 2. $1,1417 Round your answer to two decimal places. % . Would you pay $861 for each bond if you thought that a "fair" market interest rate for such bonds was 13%-that is, if rd = 13% ? 1. You would buy the bond as long as the yield to maturity at this price equals your required rate of return. II. You would not buy the bond as long as the yield to maturity at this price is greater than your required rate of return. III. You would not buy the bond as long as the yield to maturity at this price is less than the coupon rate on the bond. IV. You would buy the bond as long as the yield to maturity at this price is greater than your required rate of return. V. You would buy the bond as long as the yield to maturity at this price is less…
Brooks Books’ bonds have 13 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 8 percent; and the yield to maturity is 7.5 percent. What is the bond’s current market price? a. $1,000.00 b. $980.72 c. $1,040.63 d. $650.07 e. $1,080.00
Mansuk
An issue of bonds with par of $1000 matures in 12 years and pays interest at 7% annually. The current quoted market price is $1200 and the investors required rate of return is 8%. (a) Calculate the bonds expected rate of return. (b) Should the investor purchase the bond? (Explain your answer.)