Essex Biochemical Co. has a $1,000 par value bond outstanding that pays 10 perce

Question

Essex Biochemical Co. has a $1,000 par value bond outstanding that pays 10 percent annual interest. The current yield to maturity on such bonds in the market is 8 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. d Appendix D for an ap formula and financial er using the formula and f Compute the price of the bonds for the maturity dates: (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) eaio R nerest payments are Bond Price a. 30 years b. 16 years c. 1 year

Explanation / Answer

1. Esses Biochemicals

2. Tom Cruise Inc.

3.Media Bias.

Present value of Interest Payments $(a) Present value of Principal $(b) Price of the Bond= (a+b) a. 30 years to maturity PV=(A*PVIFA(n=30,i=8%) ($100*11.2578) 1125.78 PV=(A*PVIF(n=30,i=8%) ($1000*0.0994) 99.4 1225.18 a. 16 years to maturity PV=(A*PVIFA(n=16,i=8%) ($100*8.8514) 885.14 PV=(A*PVIF(n=16,i=8%) ($1000*0.2919) 291.9 1177.04 a. 1 years to maturity PV=(A*PVIFA(n=1,i=8%) ($100*0.9259) 92.59 PV=(A*PVIF(n=1,i=8%) ($1000*0.9259) 925.9 1018.49

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