Westco Company issued 13 - year bonds one year ago at a coupon rate of 7 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 5.3 percent, what is the current price of the bond in dollars?

Westco Company issued 13 - year bonds one year ago at a coupon rate of 7 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 5.3 percent, what is the current price of the bond in dollars?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 2EB: Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the...

See similar textbooks

Related questions

Q: Wildhorse, Inc., has four-year bonds outstanding that pay a coupon rate of 6.4 percent and make…

A: Compound = n = Semiannually = 2Time = nper = 4 * 2 = 8Coupon Rate = 6.4 / 2 = 3.2%Current Price of…

Q: Ninja Co. issued 14-year bonds a year ago at a coupon rate of 6.9 percent. The bonds make semiannual…

A: Current price of the bond is the sum of present value of maturity value of bond value and present…

Q: Renfro Rentals has issued bonds that have a 7% coupon rate, payable semiannually. The bonds mature…

A: Face value (FV) = $1000 Coupon rate = 7% Semi annual coupon amount (C) = 1000*0.07/2 = $35 Years to…

Q: O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal…

A: Nominal Coupon interest Rate = Annual Interest / Bond Par Value Present Value of cash flows =…

Q: Volbeat Corporation has bonds on the market with 30 years to maturity, a YTM of 6.2%, and a current…

A: Using excel PMT function

Q: Weismann Co. issued 18-year bonds a year ago at a coupon rate of 8 percent. The bonds make…

A: The objective of the question is to calculate the current price of the bond issued by Weismann Co.…

Q: Lei Corporation has bonds on the market with 19.5 years to maturity, a YTM of 8 percent, a par value…

A: Coupon bonds are investments that, up to the bond's maturity date, provide the bondholder with…

Q: Weismann Co. issued 5-year bonds a year ago at a coupon rate of 9 percent. The bonds make semiannual…

A: A Bond represents a debt owed typically by the government or corporation to investors. Bond Price…

Q: Skolits Corp. issued 15-year bonds 2 years ago at a coupon rate of 7.6 percent. The bonds make…

A: Calculate the yield to maturity (YTM) as follows:MS - Excel --> Formulas --> Financials -->…

Q: Draiman Corporation has bonds on the market with 18.5 years to maturity, a YTM of 6.5 percent, a par…

A: Given, Par value of bond is $1,000 Current price is $1,048 Term to maturity is 18.5 years YTM is 6.5…

Q: Westco Company issued 15-year bonds a year ago at a coupon rate of 5.4 percent. The bonds make…

A: The face value of the bond (FV) is $1,000. The coupon rate of the bond is 5.4%. The maturity of the…

Q: Ashburn Corporation issued 15-year bonds 2 years ago at a coupon rate of 8.8 percent. The bonds make…

A: Bonds refer to instruments that are issued for raising debt capital for the issuer from…

Q: Popie Drink Corp issued 12 year bonds 2 years ago at a coupon rate of 8.4 percent. The bonds make…

A: Compound = semiannually = 2 Time = nper = (12 - 2) * 2 = 20 semiannually Coupon rate = 8.4/ 2 = 4.2%…

Q: FINA issued 30-year bond 5 years ago. The current market value of the debt is $50M. The face value…

A: formula of YTM of bond: ytm=2×coupon+facevalue-pricenfacevalue+price2

Q: Nikita Enterprises has bonds on the market making annual payments, with 17 years to maturity, a par…

A: The coupon rate of a bond is the fixed annual interest rate that the issuer commits to pay…

Q: ConEdison Utility Company has four-year bonds outstanding that pay a coupon rate of 6.6% and make…

A: Yield to maturity of the company will be reflective of the required rate of return for investor in…

Q: Wesimann Co. issued 11-year bonds a year ago at a coupon rate of 7.7 percent. The bonds make…

A: Face amount (fv): $1,000 Interest payment (pmt): $1,000*7.7%/2= $38.5 Market interest rate (rate):…

Q: Draiman Corp has bonds on the market with 14.5 years to maturity, a YTM of 5.3%, a par value of…

A: Years to maturity = 14.5 Years Number of semi annual payments (n) = 14.5*2 = 29 YTM = 5.3% Semi…

Q: Renfro Rentals has issued bonds that have a 9% coupon rate, payable semiannually. The bonds mature…

A: The price of the bond is calculated by discounting the cashflows from the bond in future at yield to…

Q: Gabriele Enterprises has bonds on the market making annual payments, with eleven years to maturity,…

A: Coupon rate:The coupon rate is the rate of yield provided by the fixed-income securities and it is…

Q: Watters Umbrella Corp. issued 12-year bonds 2 years ago at a coupon rate of 7.8 percent. The bonds…

A: Using Excel Rate Function

Q: Too Young, Inc., has a bond outstanding with a coupon rate of 6.9 percent and semiannual payments.…

A: Par value = $1,000 Coupon rate = 6.9% Semi annual coupon amount = 1000*0.0690/2 = $34.50 Years to…

Q: Kenny Electric Company's noncallable bonds were issued several years ago and now have 20 years to…

A: Using excel rate function

Q: What is the yield to maturity on these bonds?

A: Yield to maturity or the interest rate of the bond refers to the rate of interest earned till the…

Q: The bonds issued by Stainless Tubs bear a 6 percent coupon, payable semiannually. The bonds mature…

A: Semti annual compounding: Bond maturity years = 11 Face value = 1000 Current value = 989 Coupon rate…

Q: coupon

A: Formula to calculate the coupon rate is: Coupon rate = Coupon payment/Face value

Q: Happy Valley Corporation has bonds on the market with 14.5 years to maturity, a YTM of 6.1%, face…

A: Intrinsic value of bond is the value which a bond holder will get from holding the bond. To…

Q: Wesimann Co. issued 15-year bonds a year ago at a coupon rate of 8.7 percent. The bonds make…

A: Calculation of Current Bond Price:The bond is issued a year ago so the bond duration is 14 years.The…

Q: The 14-year, $1,000 par value bonds of Waco Industries pay 7 percent interest annually. The market…

A: Par value = $ 1000 Coupon rate = 7% Coupon amount = 1000*0.07 = $ 70 Market price = $ 935 Years to…

Q: Nikita Enterprises has bonds on the market making annual payments, with ten years to maturity, a par…

A: The coupon rate is the rate at which the interest is paid to the bondholders based on the face value…

Q: Page Enterprises has bonds on the market making annual payments, with eight years to maturity, and…

A: The price of a bond is equal to the sum of the present value of coupon payments and the present…

Q: Parkway Void Co. issued 15-year bonds two years ago at a coupon rate of 9.9 percent. The bonds make…

A: Yield to maturity (YTM) is the rate which an investor earns when the bond is held till its maturity.

Q: One year ago, XYZ Co. issued 13-year bonds at par. The bonds have a coupon rate of 3.51 percent,…

A: Coupon rate = 6.49%Face value = $1000Market yield = 6.98%Percentage change in price of bond.

Q: Nikita Enterprises has bonds on the market making annual payments, with eleven years to maturity, a…

A: Here, Par Value of Bond$1000Current Price of Bond$970YTM of Bond7%Time to Maturity in years11

Q: Maxcorp’s bonds sell for $1,065.15. The bond life is 9 years, and the yield to maturity is 7%. What…

A: Formulas:

Question

Westco Company issued 13-year bonds one
year ago at a coupon rate of 7 percent. The
bonds make semiannual payments and have
a par value of $1,000. If the YTM on these
bonds is 5.3 percent, what is the current price
of the bond in dollars?

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 to bonds

VIEW

Step 2: Computing the current price of the bond

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the market rate of interest was 5%. If the bonds sold at 102.438, how much cash did Williams Sisters Inc. receive from issuing the bonds?
Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?
Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 5% coupon paid annually and warrants attached. These bonds are currently trading for $1,000. Neubert also has outstanding $1,000 par value 15-year straight debt with a 7% coupon paid annually, also trading for $1,000. What is the implied value of the warrants attached to each bond?
Smashing Cantaloupes Inc. issued 5-year bonds with a par value of $35,000 and an 8% semiannual coupon (payable June 30 and December 31) on January 1, 2018, when the market rate of interest was 10%. Were the bonds issued at a discount or premium? Assuming the bonds sold at 92.288, what was the sales price of the bonds?
Dufner Co. issued 15-year bonds one year ago at a coupon rate of 6.6 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.5 percent, what is the current dollar price assuming a par value of $1,000?
Jones and Jones Co. issued 15-year bonds a year ago at a coupon rate of 4.1 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 4.5 percent, what is the current bond price?
Westco Company issued 11-year bonds a year ago at a coupon rate of 7.7 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6 percent, what is the current bond price in dollars?
Ninja Co. issued 14-year bonds a year ago at a coupon rate of 6.9 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.2 percent, what is the current bond price?
Weismann Company issued 5-year bonds a year ago at a coupon rate of 11 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 7 percent, what is the current bond price?
The Photo Film Company’s bonds have fouryears remaining to maturity. Interest is paid annually,the bonds have a $1,000 par value, and the couponinterest rate is 8.75%.(a) What is the yield to maturity at a current marketprice of $1,108?(b) Would you pay $935 for one of these bonds ifyou thought that the market rate of interest was9.5%?
Dexter Mills issued 30-year bonds one year ago at a coupon rate of 10.9 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM is 8.8 percent, what is the current bond price?
Westco Co. issued 15-year bonds a year ago at a coupon rate of 5.4 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 4.5 percent, what is the current price of the bond in dollars ? How can I calculate it without excel ?