You have purchased a zero coupon bond that will pay $15,000 toyour newborn child in 21 years. If this bond is discounted at a rateof 2.875% per year, what is today's price (present value) for thisbond?A. $5,654B. $9,348.25C. $8,271.50D. $15,000

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Answered: You have purchased a zero coupon bond…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You have purchased a zero coupon bond that will pay $15,000 to your newborn child in 21 years. If this bond is discounted at a rate of 2.875% per year, what is today's price (present value) for this bond? Question content area bottom Part 1 A. $15,000 B. $5,654 C. $9,348.25 D. $8,271.50
What would you pay for a $210,000 debenture bond that matures in 15 years and pays $10,500 a year in interest if you wanted to earn a yield of: Click here to view factor tables. (a) 3%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answes to O decimal places, e.g. 458,581.) Amount to pay $
You purchased a bond at a price of $1,400. In 25 years when the bond matures, the bond will be worth $10,000. It is exactly 17 years after you purchased the bond and you can sell the bond today for $7,300. If you hold the bond until it matures, what annual rate of return will you earn from today? Multiple Choice O 3.6 percent 4.0 percent 8.2 percent 10.2 percent 4.5 percent
How much would you be prepared to pay for a $1,000 bond which comes due in 8 years and pays $100 interest annually assuming your required rate of return is 12% (pick closest answer)? a. $901 b. $1,032 c. $1,007 d. $962
4. You buy a 4% 10-year $1,000 face value bond for $1,148.14. A year later, you sell the bond for $1,200. What is your rate of return on the bond for the year?
What would you pay for a $110,000 debenture bond that matures in 15 years and pays $5,500 a year in interest if you wanted to earn a yield of: Click here to view factor tables. (a) 3%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.
To secure a return of 4%, at what price should a bond be purchased if it is redeemable at P 1,000 in 10 years and plays annual dividends of P 35,00? Ans. P 959.45 You purchased a P 500 bond for P 5,100.00. The bond pays 200 per year. It is redeemable for P 5,050 after 10 years. What is the net rate of interest on your investment? Ans. 3.486%
suppose you own a 40-year bond that has a bond rate of 2% per year. 1. How much money will you lose if the value of the bond today is $10,000 (face value of the bond) and the yield increases to 3% ? 2. If this bond is purchased now for $5,000, what yearly yield would the buyer receive?
a. Assuming you purchased the bond for $350 what rate of return would you earn if you held the bond for 25 years until it matured with a value $1000? a. Rate of return____% b. Suppose under the terms of thebond you could redeem the bond in 2024. DMF agreed to pay an annual interest rate of 1.4 percent until the date. How much would the bond be worth at that time? b. Bond value_____ c. In 2024 instead of cashing in the bond for its then current value you decide to hold the bond until it mature in 2043. What annual rate of return will you earn over the last 19 years? c. Rate of return___%
You are considering the purchase of Coupon Bond with a face value of $1,000, which matures in twenty-seven years and pays 6.38% annual coupons. If you require a return of 4.76% on this security, what price should you bid on it today? $1,217.99 $1,243.37 $1,288.99 $1,000.00
You will be paying $8,600 a year In tultion expenses at the end of the next two years. Bonds currently yleld 7%. Q. What is the present value and duration of your obligation? b. What maturity zero-coupon bond would Immunize your obligation? c. Suppose you buy a zero-coupon bond with value and duration equal to your obligation. Now suppose that rates immediately Increase to 9%. What happens to your net position, that is, to the difference between the value of the bond and that of your tultion obligation? d. What if rates fall Immediately to 5% ? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D What is the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places.) \table[[,,,],[Present value,,,,,],[Duration,,years,,,]]
You win the Console Lottery. They payoff is a growing “console” bond. That means that the bond will pay you $100,000 next year and the payment will grow a 3.5% per year forever. If your required return is 8%, what is the value of the bond to you today? Group of answer choices $2,222,222. $1,250,000. $100,000. $2,857,143.

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You have purchased a zero coupon bond that will pay $15,000 to your newborn child in 21 years. If this bond is discounted at a rate of 2.875% per year, what is today's price (present value) for this bond? A. $5,654 B. $9,348.25 C. $8,271.50 D. $15,000