Homework: Chapter 7 Graded Homework Score: 0 of 1 pt Problem 7.LO4.27 (similar t
ID: 2620671 • Letter: H
Question
Homework: Chapter 7 Graded Homework Score: 0 of 1 pt Problem 7.LO4.27 (similar to Save 9 of 16 (3 complete) HW Score: 6.25%, 1 of 16 pts EQuestion Help ron Maiden became the first heavy-metal band to sell bonds when it arranged a $30 million deal in February 1999. The collateral on the bonds (and source of cash flow for interest and principal payments) consisted of future royalties from the band's albums like Of S 1,000. a term of 16 years and paid semiannual coupons at the rate of 7%. The yield to maturity on the bond was 8 The Number of the Beast Each bond in the issue had a face value 75%. At what price did each of the bonds sen? The price of each of the bonds was $(Round to the nearest cent)Explanation / Answer
1.
Using financial calculator BA II Plus - Input details:
#
I/Y = Rate or yield / frequency of coupon in a year =
4.375
PMT = Payment = Coupon / frequency of coupon =
-$35.00
N = Total number of periods = Years x frequency of coupon =
32
FV = Future Value =
-$1,000.00
CPT > PV = Price of each Bond =
$850.81
The price of each of the bonds was = $850.81
2.
Using financial calculator BA II Plus - Input details:
#
FV = Future or Face Value =
$1,000
PV = Present Value or Price of the Bond =
-$857.89
N = Total number of periods = Years x frequency of coupon =
40
PMT = Payment = Coupon / frequency of coupon =
$22.50
CPT > I/Y = Rate or YTM Semiannual =
2.8500
Convert Yield in annual and percentage form = Yield / 100 * 2 =
5.70%
Yield to Maturity = 5.70%
Using financial calculator BA II Plus - Input details:
#
I/Y = Rate or yield / frequency of coupon in a year =
4.375
PMT = Payment = Coupon / frequency of coupon =
-$35.00
N = Total number of periods = Years x frequency of coupon =
32
FV = Future Value =
-$1,000.00
CPT > PV = Price of each Bond =
$850.81
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