Question

Kilgore Natural Gas has a $1,000 par value bond outstanding that pays 14 percent annual interest. The current yield to maturity on such bonds in the market is 11 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Compute the price of the bonds for these maturity dates: (Do not round intermediate calculations. Round your final answers to 2 decimal places. Assume interest payments are annual.)

30 Years Bond Price =

17 Years Bond Price =

3 Year Bond Price =

Answer 1

a)	CUOPON Amount = 14% 0f 1000 = 140
	Price = 140 *PVIFA(11%,30) + 1000PVIF( 11%, 30)
	8.694*140 +1000* 0.0437
	Price=	1217.16 + 43.7
		1260.86
b)	CUOPON Amount = 14% 0f 1000 = 140
	Price = 140 *PVIFA(11%,17) + 1000PVIF( 11%, 17)
	7.549*140 +1000* 0.1696
	Price=	1056.83 + 169.6
		1226.43
c)	CUOPON Amount = 14% 0f 1000 = 140
	Price = 140 *PVIFA(11%,3) + 1000PVIF( 11%, 3)
	2.444*140 +1000* 0.7312
	Price=	342.16 + 731.2
		1073.36