What would you pay for a $205,000 debenture bond that matures in 15 years and pays $10,250 a year in interest if you wanted to earn a yield of: 2%,3%, 4%
Part-1(A) Computation of Price for Debenture Bond, Rate 2% | |
PV of Annual interest (10250*12.84926) | $131,704.92 |
PV of Face Value of Bond (205000*0.74301) | $152,317.05 |
Price of Bond | $284,021.97 |
Part-1(B) Computation of Price for Debenture Bond, Rate 3% | |
PV of Annual interest (10250*11.93794) | $122,363.89 |
PV of Face Value of Bond (205000*0.641862 | $131,581.71 |
Price of Bond | $253,945.60 |
Part-1(c ) Computation of Price for Debenture Bond, Rate 4% | |
PV of Annual interest (10250*11.11839) | $113,963.50 |
PV of Face Value of Bond (205000*0.55526) | $113,828.30 |
Price of Bond | $227,791.80 |
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