Chap 14 Exercises (Static) x com/hm.tpx?-0.29842057239225106 1517359768516 Chap

Question

Chap 14 Exercises (Static) x com/hm.tpx?-0.29842057239225106 1517359768516 Chap 14 Exercises (Slatic) Question 1 (0f7) value 0.50 points Complete the below table to calculate the price of a $1 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 PVAD of $1) (Use appropriate factorá) from the tables provided. Enter your answers in whole dollars.): 1. Maturity 10 years, interest paid annually, stated rate 10%, effective (market) rate 12% 12 0% Amount Present Value Interest 100,000 Principal $ 1,000,000 Price of bonds 2. Maturity 10 years, interest paid semiannually stated rate 10%, effective (market) rate 12% ble are Cash Flow Interest Principal Amount Present Value Price of bonds

Explanation / Answer

1-

value of bond

interest*PVAF at 12% for 10 years + Face value*PVF at 12% for 10th year

100000*5.650223 + 1000000*.3219

886995.3

Interest

1000000*10%

100000

Face value

1000000

PVAF at 12%

1-(1+r)^-n/r

1-(1.12)^-10/.12

5.65

PVF at 12% for 10th Year

1/(1+r)^n

1/(1.12)^10

0.321973

2-

value of bond

interest*PVAF at 12% for 10 years + Face value*PVF at 12% for 10th year

50000*11.46992+ 1000000*.311805

885301

Interest

1000000*10%*1/2

50000

Face value

1000000

PVAF at 12% for 20 semiannual period

1-(1+r)^-n/r

1-(1.06)^-20/.06

11.46992

PVF at 12% forr 20th semiannual period

1/(1+r)^n

1/(1.06)^20

0.311805

3-

value of bond

interest*PVAF at 12% for 10 years + Face value*PVF at 12% for 10th year

60000*12.46221+ 1000000*.376889

1124622

Interest

1000000*12%*1/2

60000

Face value

1000000

PVAF at 10% for 20 semiannual period

1-(1+r)^-n/r

1-(1.05)^-20/.05

12.46221

PVF at 12% for 20th semiannual period

1/(1+r)^n

1/(1.05)^20

0.376889

4-

value of bond

interest*PVAF at 12% for 10 years + Face value*PVF at 12% for 10th year

60000*17.15909+ 1000000*.142046

1171591

Interest

1000000*12%*1/2

60000

Face value

1000000

PVAF at 10% for 40 semiannual period

1-(1+r)^-n/r

1-(1.05)^-40 /.05

17.15909

PVF at 10% for 40th semiannual period

1/(1+r)^n

1/(1.05)^40

0.142046

5-

value of bond

interest*PVAF at 12% for 10 years + Face value*PVF at 12% for 10th year

60000*15.0463+ 1000000*.097222

1000000

Interest

1000000*12%*1/2

60000

Face value

1000000

PVAF at 12% for 40 semiannual period

1-(1+r)^-n/r

1-(1.06)^-40 /.06

15.0463

PVF at 12% for 40th semiannual period

1/(1+r)^n

1/(1.06)^40

0.097222

1-

value of bond

interest*PVAF at 12% for 10 years + Face value*PVF at 12% for 10th year

100000*5.650223 + 1000000*.3219

886995.3

Interest

1000000*10%

100000

Face value

1000000

PVAF at 12%

1-(1+r)^-n/r

1-(1.12)^-10/.12

5.65

PVF at 12% for 10th Year

1/(1+r)^n

1/(1.12)^10

0.321973

2-

value of bond

interest*PVAF at 12% for 10 years + Face value*PVF at 12% for 10th year

50000*11.46992+ 1000000*.311805

885301

Interest

1000000*10%*1/2

50000

Face value

1000000

PVAF at 12% for 20 semiannual period

1-(1+r)^-n/r

1-(1.06)^-20/.06

11.46992

PVF at 12% forr 20th semiannual period

1/(1+r)^n

1/(1.06)^20

0.311805

3-

value of bond

interest*PVAF at 12% for 10 years + Face value*PVF at 12% for 10th year

60000*12.46221+ 1000000*.376889

1124622

Interest

1000000*12%*1/2

60000

Face value

1000000

PVAF at 10% for 20 semiannual period

1-(1+r)^-n/r

1-(1.05)^-20/.05

12.46221

PVF at 12% for 20th semiannual period

1/(1+r)^n

1/(1.05)^20

0.376889

4-

value of bond

interest*PVAF at 12% for 10 years + Face value*PVF at 12% for 10th year

60000*17.15909+ 1000000*.142046

1171591

Interest

1000000*12%*1/2

60000

Face value

1000000

PVAF at 10% for 40 semiannual period

1-(1+r)^-n/r

1-(1.05)^-40 /.05

17.15909

PVF at 10% for 40th semiannual period

1/(1+r)^n

1/(1.05)^40

0.142046

5-

value of bond

interest*PVAF at 12% for 10 years + Face value*PVF at 12% for 10th year

60000*15.0463+ 1000000*.097222

1000000

Interest

1000000*12%*1/2

60000

Face value

1000000

PVAF at 12% for 40 semiannual period

1-(1+r)^-n/r

1-(1.06)^-40 /.06

15.0463

PVF at 12% for 40th semiannual period

1/(1+r)^n

1/(1.06)^40

0.097222

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