Question

**PLEASE DRAW A CASH FLOW DIAGRAM AND THEN ANSWER! If
there is no diagram = Thumbs down!!!!!**

A corporate bond has a value of $10,000, a bond interest rate of 8% per year payable semiannually, and a maturity date of 20 years from now. If a person purchases the bond for $9,000 when the interest rate in the market place is 8% per year compounded semiannually, the size and frequency of the interest payments the person will receive are?

Answer #2

There are 20 years to maturity; Bond is semiannual pay bond, hence we will have about 40 time intervals in which we would receive 40 bond coupon payment.

Time 0 = Cash flow = -$9,000 (Initial cost)

**Size of interest payment = $400 ; Frequency = 2 payments
per year x 20 years = 40**

Time 1 to Time 40 = Size and frequency of Interest payment = 10000 x 8% /2 = $400

Time 40 will also have additional payment of principal = $10400

We will sum last two payments i.e. $400 + $10000 = $10,400

-------------------

Cash flow diagram below:

Time 23 24 25 26 27 28 29 30 31 32 33 3435 36 37 38 39 40 10 11 12 13 14 1516 17 18 19

answered by: anonymous

Investor A has just sold a ten-year $10,000 corporate bond to
Investor B for $8,500. Investor A purchased the bond four years ago
for $9,500. The bond coupon rate is 8
percent per year paid annually and Investor A has just received the
dividend for year 4.
Draw the cash flow diagram for Investor A
Calculate the Rate of Return for Investor A
Draw the cash flow diagram for Investor B
Investor B has a MARR of 10% per year...

Investor A has just sold a ten-year $10,000 corporate bond to
Investor B for $8,500. Investor A purchased the bond four years ago
for $9,500. The bond coupon rate is 8 percent per year paid
annually and Investor A has just received the dividend for year
4.
a) Draw the cash flow diagram for Investor A
b) Calculate the Rate of Return for Investor A
c) Draw the cash flow diagram for Investor B
d) Investor B has a MARR...

Show your complete solution. Draw the cash-flow
diagram of the
following problem.
The maintenance cost of a certain equipment is ₱
32,000 per year for the
first five years, ₱ 45,000 per year for the next five years and ₱
15,000 at the
end of the 4th year and 6th year. Find the equivalent uniform
annual cost
of maintenance if money is worth 10% compounded annually.

A bond very recently purchased for $9,000 has a face value of
$10,000 and a bond interest rate of 10% per year payable
semiannually. The bond is due (matures) in 3 years. The company
that
issued the bond is contemplating a liquidity problem in 3 years
and has just advised all bondholders that if they will keep their
bonds for an additional 2 years past the original due date, the
bond interest rate for the additional two years will be...

The second and fifth cash flows in the following cash flow
stream are missing. Both cash flows are the same (that is, CF2 =
CF5). If the future value at the end of year 10 (that is, at t =
10) of this cash flow stream (these are the only cash flows in the
cash flow stream) is $10,000 at a nominal annual interest rate of 8
percent, compounded semiannually, what is the amount of the missing
cash flow?

Construct a cash flow diagram that represents the amount of
money that will be accumulate in 7 years from the initial
investment of $20,000 now and $3,500 per year for 7 years at an
interest rate of 8% per year.

Draw a cash flow diagram and show ALL work for arriving
at the final answer. I have given you the answers so that you will
know if your answer is correct.
Two foresters are in disagreement concerning the proper
grazing method for their uneven aged pine stand. Mr. X claims that
by practicing continuous grazing he can receive an annual income of
$800. The first income would be received at the end of the first
year. Dr. Z claims that...

You have just purchased a municipal bond with a $10,000 par
value for $9,500. You purchased it immediately after the previous
owner received a semiannual interest payment. The bond rate is 6.6%
per year payable semiannually. You plan to hold the bond for 4
years, selling the bond immediately after you receive the interest
payment. If your desired nominal yield is 3.5% per year compounded
semiannually, what will be your minimum selling price for the
bond?

(Bond valuation) You are examining three bonds with a par value
of $1 comma 000 (you receive $1 comma 000 at maturity) and are
concerned with what would happen to their market value if interest
rates (or the market discount rate) changed. The three bonds are
Bond Along dash a bond with 6 years left to maturity that has an
annual coupon interest rate of 9 percent, but the interest is paid
semiannually. Bond Blong dash a bond with 11...

Construct a cash flow diagram that represents the amount of
money that will be accumulated in 7 years from an initial
investment of $20,000 now and $3,500 per year for 7 years at an
interest rate of 8% per year. And calculate what the final amount
after the 7 years will be.

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 10 minutes ago

asked 11 minutes ago

asked 30 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago