You are called in as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 11 percent, which is paild semiannually. The yield to maturity on the bonds is 14 percent annual interest. There ore 15 years to maturity. Use Apnendix B and ARrendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the price of the bonds based on semiannual analysis. (Do not round intermediate calculations. Round your finsl answer to 2 decimal places.) Bond price 813.86 b. With 10 years to maturity, if yield to maturity goes down substantially to 10 percent, what will be the new price of the bonds? (Do not round Intermediate calculations. Round your final answer to 2 decimal places.)
You are called in as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 11 percent, which is paild semiannually. The yield to maturity on the bonds is 14 percent annual interest. There ore 15 years to maturity. Use Apnendix B and ARrendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the price of the bonds based on semiannual analysis. (Do not round intermediate calculations. Round your finsl answer to 2 decimal places.) Bond price 813.86 b. With 10 years to maturity, if yield to maturity goes down substantially to 10 percent, what will be the new price of the bonds? (Do not round Intermediate calculations. Round your final answer to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1
Transcribed Image Text:You are called in as a financial analyst to appraise the bonds of Olsen's Clothing Stores. The $1,000 par value bonds have a quoted
annual interest rate of 11 percent, which is paid semiannually. The yield to maturity on the bonds is 14 percent annual Interest There
are 15 years to maturity. Use Arnendix B and Appendix D for an approximate answer but calculate your final answer using the formula
and financial calculator methods.
a. Compute the price of the bonds based on semiannual analysis. (Do not round intermediate calculations. Round your final answer
to 2 decimal places.)
Bond price
813.86
b. With 10 years to maturity, if yield to maturity goes down substantially to 10 percent, what will be the new price of the bonds? (Do not
round Intermediate calculations. Round your final answer to 2 decimal places.)
New bond price
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