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: A 25-year, $1,000 par value bond has a 9.0% annual payment coupon. The bond currently sells for…

A: Bonds refer to instruments that are issued by a company to raise debt capital from non-traditional…

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: what will the price be 4 years from now? a $935.27 b. $936.94 с. $938.61 d. $940.43 e. $975.84

A: Bonds can trade at a premium, at par, or at a discount, depending on the market conditions for…

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: calculate the present value

A: Present value (PV) is nothing but the present value of all future cash inflows from a bond. And we…

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 currently has a price of $890. The yield on the bond is 6%. If the yield increases 25 basis…

A: It is given that if yield increase by 0.25% the prices of bonds go down to $870 Computation of % of…

Q: A bond matures in 12 yesrs has a $1000 par value. The annual interest rate is 13 percent. The…

A: Time period of bond = 12 years Par value = $1000 Coupon Rate = 13% Yield to maturity = 14%

Q: Yield to maturity The Salem Company bond currently sells for $684.14, has a coupon interest rate of…

A: Calculation of YTM:

Q: 1. A bond maturing in 10 years pays annual coupon payment $80 each year and $1,000 upon maturity.…

A: Solution:- Present value of bond means the current price of bond at which it is trading in the…

Q: (Bond valuation relationships) A bond of Telink Corporation pays $110 in annual interest, with a…

A: Step-by-Step Calculations: a. Market's required yield to maturity is 10% P10%=∑20t=1110/(1+0.10)t+…

Q: You own a $1,000 par value bond with 20 years to maturity that is paying an annual coupon rate of…

A: Price=Coupon Payment×1-1+YTM-nYTM+Face Value1+YTMn

Q: Consider a bond with a $1,000 par value, 8% annual coupon, 10 years to maturity, with an interest…

A: Duration of bond = Present value of cash flow/ bond price

Q: A corporate bond makes payments of $96.70 semi-annually for ten years with a final payment of…

A: We are given that the bond makes semi-annual payments of $96.70 for 10 years and a final payment of…

Q: Yield to maturity The Salem Company bond currently sells for $1,213.45, has a coupon interest rate…

A: Given Data: Current Price 1213.45Coupon Rate15%Face Value1000Years (NPER)13

Q: (Bond valuation relationships) A bond of Telink Corporation pays $110 in annual interest, with a…

A: Step 1: Given InformationAnnual Interest (Coupon Payment): $110Par Value: $1,000Maturity: 20…

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: 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: 30-year, $1,000 par value bond has an 8% annual payment coupon. The bond currently sells for…

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

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: Miles Corporation's bonds have a 15-year maturity, an 8% semi-annual coupon, and a par value of…

A: The bond's price is present value of future coupons and par value receivable at maturity. bond pays…

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: 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: A 25-year, $1,000 par value bond has a 9.0% annual payment coupon. The bond currently sells for…

A: Variables in the question:Par value=$1000Annual coupon rate=9%N=25 yearCurrent market…

Q: A $14,000 bond has a coupon rate of 10% and is redeemable in 5 years. What is the yield rate of the…

A: The bond's annual interest income expressed as a percentage of its current market value is called…

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: The Salem Company bond currently sells for $955, has a 12% coupon interest rate and a $1,000 par…

A: Bond price = $955 Coupon rate = 12% Par value = $1000 Coupon amount = 1000*0.12 = $120 Years to…

Q: Use the following tables to calculate the present value of a $502,000, 5%, 5-year bond that pays…

A: Present Value of Bond = Present Value of Coupon Payments + Present Value of Redemption Value…

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: Fingen's 16-year, $1 comma 000 par value bonds pay 14 percent interest annually. The market price…

A: Face value$1,000Market price of bond$1,070Coupon rate14%Years to maturity16 years

Q: A bond has a face value of $300 and a coupon rate of 6% p.a., with coupon payments made four times a…

A: On the maturity date the bond issuer will pay the promised face value of the bond along with the…

Q: ro coupon bond with a face value of $1,000 is issued with an initial price of $435.50. The bond…

A: Zero coupon bonds are bonds which do not pay any coupon payment but pay par value on maturity of…

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 Treasury bond has a face value of $100, a maturity of 20 years, a coupon of 4%, and pays the…

A: The objective of this question is to calculate the yield of a Treasury bond given its face value,…

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: 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: 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…

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

A $1,000 par value bond matures in 11 years, pays interest semiannually, and has a 6.5 percent coupon. The bond currently sells for $1,025. What is the yield-to-maturity? 6.17% 6.37% 6.34% 6.18% 6.28%
A bond has a 12% coupon rate. The coupon is paid semi-annually and the last coupon was paid 79 days ago. If the bond has a par value of $1,000, what is the accrued interest (assume a 364 day year)? Group of answer choices A. $20.44 B. $23.65 C. $26.04 D. $16.69 E. $22.49
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…
Vijay shiyal
A 15-year bond with a coupon of Sx payable every 6 months has a face (and redemption) value of $10,000. At the nominal annual interest rate of 6.5% convertible semi-annually, the price of the bond is $9,000. Compute X.
The 12-year $1,000 par bonds of Vail Inc. pay 8 percent interest. The market's required yield to maturity on a comparable-risk bond is 12 percent. The current market price for the bond is $850. 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? Question content area bottom Part 1 a. What is your yield to maturity on the Vail bonds given the current market price of the bonds? enter your response here% (Round to two decimal places.)
A Treasury bond has a face value of $100, a maturity of 20 years, a coupon of 4%, and pays the coupon every six months, at the end of each six month period. The price of the bond is $105. What is the yield of this bond? a. 3.65% b. 1.8% C. 1.7% d. 3.8%
If the annual interest rate printed on the face of a bond is 10 percent, the face value of the bond is $1,000, and you purchase the bond for $1,250, what is the current yield on the bond? O A. 5 percent. O B. 6 percent. OC. 12.5 percent. O D.8 percent.
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.
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
A bond has the following terms: Principal amount $1,000 Semi-annual interest $45 Maturity 15 years a. What is the bond's price if comparable debt yields 11%? b. What would be the price if comparable debt yields 11% and the bond matures after ten years? c. What would be the bond's price in a. and b. if interest rates declined to 8 % ?