There are five sets that are required. Help Save& Exit Sub Check my work Complet
ID: 2522068 • Letter: T
Question
There are five sets that are required. Help Save& Exit Sub Check my work Complete the below table to calculate the price of a $1.4 million bond issue under each of the following independent assumptions (FV of 1" PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVADorsi) (Use appropriate factor(s) from the tables provided.): 1. Maturity 15 years, interest paid annually, stated rate 10%, effective (market) rate 12% 2. Maturity 15 years, interest paid semiannually, stated rate 10%, effective (market) rate 12% 3. Maturity 5 years, interest paid semiannually, stated rate 12%, effective (market) rate 10% 4. Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 10% 5, Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 12% Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required S Maturity 15 years, interest paid annually, stated rate 10%, effective (market) rate 12%. (Round your answers to the nearest whole dollar.) 3:12 PM re to search 4/15/201
Explanation / Answer
Answer 1.
Face Value = $1,400,000
Annual Coupon = 10%*$1,400,000
Annual Coupon = $140,000
Annual Interest Rate = 12%
Time to Maturity = 15 years
Price of Bond = $140,000 * PVA of $1 (12%, 15) + $1,400,000 * PV of $1 (12%, 15)
Price of Bond = $140,000 * 6.8109 + $1,400,000 * 0.1827
Price of Bond = $1,209,306
Answer 2.
Face Value = $1,400,000
Annual Coupon Rate = 10%
Semiannual Coupon = 5%*$1,400,000
Semiannual Coupon = $70,000
Semiannual Interest Rate = 6%
Semiannual Period to Maturity = 30
Price of Bond = $70,000 * PVA of $1 (6%, 30) + $1,400,000 * PV of $1 (6%, 30)
Price of Bond = $70,000 * 13.7648 + $1,400,000 * 0.1741
Price of Bond = $1,207,276
Answer 3.
Face Value = $1,400,000
Annual Coupon Rate = 12%
Semiannual Coupon = 6%*$1,400,000
Semiannual Coupon = $84,000
Semiannual Interest Rate = 5%
Semiannual Period to Maturity = 10
Price of Bond = $84,000 * PVA of $1 (5%, 10) + $1,400,000 * PV of $1 (5%, 10)
Price of Bond = $84,000 * 7.7217 + $1,400,000 * 0.6139
Price of Bond = $1,508,083
Answer 4.
Face Value = $1,400,000
Annual Coupon Rate = 12%
Semiannual Coupon = 6%*$1,400,000
Semiannual Coupon = $84,000
Semiannual Interest Rate = 5%
Semiannual Period to Maturity = 20
Price of Bond = $84,000 * PVA of $1 (5%, 20) + $1,400,000 * PV of $1 (5%, 20)
Price of Bond = $84,000 * 12.4622 + $1,400,000 * 0.3769
Price of Bond = $1,574,485
Answer 5.
Face Value = $1,400,000
Annual Coupon Rate = 12%
Semiannual Coupon = 6%*$1,400,000
Semiannual Coupon = $84,000
Semiannual Interest Rate = 6%
Semiannual Period to Maturity = 20
Price of Bond = $84,000 * PVA of $1 (6%, 20) + $1,400,000 * PV of $1 (6%, 20)
Price of Bond = $84,000 * 11.4699 + $1,400,000 * 0.3118
Price of Bond = $1,400,000
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