Question

The following terms relate to independent bond issues:

A: 420 bonds; $1,000 face value; 8% stated rate; 5 years; annual interest payments

B: 420 bonds; $1,000 face value; 8% stated rate; 5 years; semiannual interest payments

C: 840 bonds; $1,000 face value; 8% stated rate; 10 years; semiannual interest payments

D: 1,990 bonds; $500 face value; 12% stated rate; 15 years; semiannual interest payments

Use the appropriate present value table: PV of $1 and PV of Annuity of $1 Required: Assuming the market rate of interest is 10%, calculate the selling price for each bond issue. If required, round your intermediate calculations and final answers to the nearest dollar.

Answer #1

**Answer**

A) Selling price of Bond

= {1000 ÷ (1+0.10) ^5} + { 80 x (1 - (1+0.10) ^-5) ÷ 0.10
}

= **$ 924.18**

**= $ 924 ( round off)**

B) Selling price of Bond

= {1000 ÷ (1+0.05) ^10} + { 40 x (1 - (1+0.05) ^-10) ÷ 0.05
}

**= $ 922.77**

**= $ 923 ( round off)**

C) Selling price of Bond

= {1000 ÷ (1+0.05) ^30} + { 40 x (1 - (1+0.05) ^-30) ÷ 0.05
}

**= $ 875.36**

**= $ 875 ( round off)**

D) Selling price of Bond

= {500 ÷ (1+0.05) ^30} + { 30 x (1 - (1+0.05) ^-30) ÷ 0.05
}

**= $ 576.86**

**= $ 577 ( round off)**

Issue Price
The following terms relate to independent bond issues:
570 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
570 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
860 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
1,990 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate present value table:
PV of $1 and PV of Annuity of $1
Required:
Assuming the...

Issue Price The following terms relate to independent bond
issues: 430 bonds; $1,000 face value; 8% stated rate; 5 years;
annual interest payments 430 bonds; $1,000 face value; 8% stated
rate; 5 years; semiannual interest payments 810 bonds; $1,000 face
value; 8% stated rate; 10 years; semiannual interest payments 2,110
bonds; $500 face value; 12% stated rate; 15 years; semiannual
interest payments Use the appropriate present value table: PV of $1
and PV of Annuity of $1 Required: Assuming the...

Issue Price
The following terms relate to independent bond issues:
650 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
650 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
870 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
2,020 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate present value table:
PV of $1 and PV of Annuity of $1
Required:
Assuming the...

ssue Price
The following terms
relate to independent bond issues:
460 bonds; $1,000 face value; 8% stated rate; 5 years; annual
interest payments
460 bonds; $1,000 face value; 8% stated rate; 5 years;
semiannual interest payments
890 bonds; $1,000 face value; 8% stated rate; 10 years;
semiannual interest payments
1,830 bonds; $500 face value; 12% stated rate; 15 years;
semiannual interest payments
Use the appropriate
present value table:
PV of $1 and PV of
Annuity of $1
Required:
Assuming the...

14.. Ocean Adventures issues bonds due in 10 years with a stated
interest rate of 6% and a face value of $500,000. Interest payments
are made semi-annually. The market rate for this type of bond is
5%. What is the issue price of the bonds?
A. $537,194.
B. $464,469.
C. $538,973.
D. $500,000.
PV 1 2.5% 20pds .61027 PVA 2.5% 20pds 15.56816 PV 1 3% 10pds
.74409 PV A 3% 20pds 14.87747

Bringham Company issues bonds with a par value of $560,000 on
their stated issue date. The bonds mature in 8 years and pay 7%
annual interest in semiannual payments. On the issue date, the
annual market rate for the bonds is 10%. (Table B.1, Table B.2,
Table B.3, and Table B.4) (Use appropriate factor(s) from
the tables provided.)
1. What is the amount of each semiannual interest
payment for these bonds?
2. How many semiannual interest payments will be
made...

Bond Valuation
All bonds have a $1,000 face or par
value unless otherwise stated. kc is the coupon
rate and kdis the market cost of debt.
A $1,000 par value bond pays interest
of $35 each quarter and will mature in 10 years. If your nominal
annual required rate of return is 12 percent with quarterly
compounding, how much should you be willing to pay for this
bond?

PGP Co. expects to issue a $1,000 face-value bond that matures
in 8 years. The annual coupon rate is 9%, and interest payments are
expected to be paid semiannually. Similar bonds are currently
priced at 101.4% of face value. Given this information, what is the
required return by bondholders?
4.38%
8.75%
4.56%
8.49%
9.12%

What is the price of a bond with the following features? Face
Value = $1,000 Coupon Rate = 4% (stated as an ANNUAL rate)
Semiannual coupon payments Maturity = 5 years YTM = 4.48% (Stated
as an APR) State your answer to the nearest penny (e.g.,
984.25)

What is the price of a
bond with the following features?
Face Value = $1,000
Coupon Rate = 2% (stated as an ANNUAL rate)
Semiannual coupon payments
Maturity = 5 years
YTM = 4.8% (Stated as an APR)
State your answer to
the nearest penny (e.g., 984.25)

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