Use the following tables to calculate the present value of a $487,000 @ 5%, 5-year bond that pays $24,350 interest annually, if the market rate of interest is 10%. Round to the nearest dollar.Present Value of $1Present Value of Annuity of $1Periods5 %6 %7 %10 %Periods5 %6 %7 %10 %1.95238.94340.93458.909091.95238.94340.93458.909092.90703.89000.87344.8264521.859411.833391.808021.735543.86384.83962.81630.751312.723252.673012.624322.486854.82270.79209.76290.6830143.545953.465113.387213.169875.78353.74726.71299.6209254.329484.212364.100203.79079.74622.70496.66634.5644765.075694.917324.766544.355267.71068.66506.62275.51316 |75.786375.582385.389294.868428.67684.62741.58201.4665186.463216.209795.971305.334939..64461.59190.54393.424109.7.107826.801696.515235.7590210.61391.55839.50835.38554107.721737.360097.023586.14457

Present Value of bond is calculated by the present value of annual interest payment and present…

Use the following tables to calculate the present value of a $487,000 @ 5%, 5-year bond that pays $24,350 interest annually, if the market rate of interest is 10%. Round to the nearest dollar. Present Value of $1 Present Value of Annuity of $1 Periods 5 % 6 % 7 % 10 % : Periods 5 % 6 % 7 % 10 % 1 .95238 .94340 .93458 .90909 : 1 .95238 .94340 .93458 .90909 2 .90703 .89000 .87344 .82645 : 2 1.85941 1.83339 1.80802 1.73554 3 .86384 .83962 .81630 .75131 : 3 2.72325 2.67301 2.62432 2.48685 4 .82270 .79209 .76290 .68301 4 3.54595 3.46511 3.38721 3.16987 5 .78353 .74726 .71299 .62092 : 5 4.32948 4.21236 4.10020 3.79079 6. .74622 .70496 .66634 .56447 : 6. 5.07569 4.91732 4.76654 4.35526 7 .71068 .66506 .62275 .51316 7 5.78637 5.58238 5.38929 4.86842 8 .67684 .62741 .58201 .46651 8 6.46321 6.20979 5.97130 5.33493 .64461 .59190 .54393 .42410 : 9 7.10782 6.80169 6.51523 5.75902 10 .61391 .55839 .50835 .38554 : 10 7.72173 7.36009 7.02358 6.14457

Use the following tables to calculate the present value of a $487,000 @ 5%, 5-year bond that pays $24,350 interest annually, if the market rate of interest is 10%. Round to the nearest dollar. Present Value of $1 Present Value of Annuity of $1 Periods 5 % 6 % 7 % 10 % : Periods 5 % 6 % 7 % 10 % 1 .95238 .94340 .93458 .90909 : 1 .95238 .94340 .93458 .90909 2 .90703 .89000 .87344 .82645 : 2 1.85941 1.83339 1.80802 1.73554 3 .86384 .83962 .81630 .75131 : 3 2.72325 2.67301 2.62432 2.48685 4 .82270 .79209 .76290 .68301 4 3.54595 3.46511 3.38721 3.16987 5 .78353 .74726 .71299 .62092 : 5 4.32948 4.21236 4.10020 3.79079 6. .74622 .70496 .66634 .56447 : 6. 5.07569 4.91732 4.76654 4.35526 7 .71068 .66506 .62275 .51316 7 5.78637 5.58238 5.38929 4.86842 8 .67684 .62741 .58201 .46651 8 6.46321 6.20979 5.97130 5.33493 .64461 .59190 .54393 .42410 : 9 7.10782 6.80169 6.51523 5.75902 10 .61391 .55839 .50835 .38554 : 10 7.72173 7.36009 7.02358 6.14457

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

Use the following tables to calculate the present value of a $487,000 @ 5%, 5-year bond that pays $24,350 interest annually, if the market rate of interest is 10%. Round to the nearest dollar.
Present Value of $1
Present Value of Annuity of $1
Periods
5 %
6 %
7 %
10 %
Periods
5 %
6 %
7 %
10 %
1
.95238
.94340
.93458
.90909
1
.95238
.94340
.93458
.90909
2
.90703
.89000
.87344
.82645
2
1.85941
1.83339
1.80802
1.73554
3
.86384
.83962
.81630
.75131
2.72325
2.67301
2.62432
2.48685
4
.82270
.79209
.76290
.68301
4
3.54595
3.46511
3.38721
3.16987
5
.78353
.74726
.71299
.62092
5
4.32948
4.21236
4.10020
3.79079
.74622
.70496
.66634
.56447
6
5.07569
4.91732
4.76654
4.35526
7
.71068
.66506
.62275
.51316 |
7
5.78637
5.58238
5.38929
4.86842
8
.67684
.62741
.58201
.46651
8
6.46321
6.20979
5.97130
5.33493
9.
.64461
.59190
.54393
.42410
9.
7.10782
6.80169
6.51523
5.75902
10
.61391
.55839
.50835
.38554
10
7.72173
7.36009
7.02358
6.14457

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A $500,000, ten year, 7% bond issue was sold to yield 6% interest payable annually. Actuarial information for 10 periods is as follows: present value $1 @ 7% = 0.50835 @ 6% = 0.55839 present value of an annuity of $1 @ 7% = 7.02359 @ 6% = 7.36009 The discount or premium at the date of bond issuance would be: A $500,000, ten year, 7% bond issue was sold to yield 6% interest payable annually. Actuarial information for 10 periods is as follows: present value $1 @ 7% = 0.50835 @ 6% = 0.55839 present value of an annuity of $1 @ 7% = 7.02359 @ 6% = 7.36009 The discount or premium at the date of bond issuance would be: A: $36,798 premium B: $10,097 discount C: $11,778 D:$35,117 discount
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