What dollar amount of interest per bond can an investor expect to receive each y

Question

What dollar amount of interest per bond can an investor expect to receive each years from Charter? What is Charter's total Interest expense per year associated with this bond issue Assuming that Charter is in a 35% corporate tax bracket, what is the company's net after-tax interest cost associated with this bond issue? Bond price and yields Assume that the Financial Management Corporation's $1,000-par-value bond had a 5.700% coupon, matured on May 15, 2020, had a current price quote of 97.708, and had a yield to maturity (YTM) of 6.034%. Given this information, answer the following questions: What was the dollar price of the bond? What is the bond's current yield? Is the bond selling at par, at a discount, or at a premium? Why? Compare the bond's current yield calculated in part b to its YTM and explain why they differ. Valuation fundamentals Imagine that you are trying to evaluate the economics of purchasing an automobile. You expect the car to provide annual after-tax cash benefits of $ 1,200 at the end of each year and assume that you can sell the car for after-tax proceeds of $ 5,000 at the end of the planned 5-year ownership

Explanation / Answer

FIrst find tenure of Bond :- 1. Par Value = FV = 1000 COupon 5.7% Annual. So PMT = 5.7%*1000 = 57 YTM = Rate = 6.034% So Tenure = nper(Rate,PMT,PV,FV) = nper(6.034%,-57,,1000) = 12.32 Yrs a. Doolar price of Bond : nper = 12.32 Yrs, PMT=57, FV=1000 SO Issue price = PV(Rate,nper,PMT,FV) = PV(6.034%,12.32,57,1000) = $971.54 b. Bond current yield = Copuon PMT/Current price = 57/977.08 = 5.83% c. Bond is selling at Disc as its Coupin is 5.7% but Current yield is 5.83% d. Current yield is 5.83% while YTM is 6.034%. It is due to time valueof money. YTM is for 12.32 yrs while curent yield is only for 1 yr

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