Question

Renfro Rentals has issued bonds that have a 7% coupon rate, payable semiannually. The bonds mature...

Renfro Rentals has issued bonds that have a 7% coupon rate, payable semiannually. The bonds mature in 18 years, have a face value of $1,000, and a yield to maturity of 9%. What is the price of the bonds? Round your answer to the nearest cent.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Bond Valuation: The value of bond is the present value of the expected cashflows from the bond,discounted at Yield to Maturity(YTM).

Year Cash flow PVAF/[email protected]% Present Value (Cashflow*PVAF/PVF)
1-36 35 17.6660* 618.31
36 1000 0.205** 205.00

Current Market Price of Bonds = $823.31 (618.31+205)

Note : Since the bond makes semiannual interest payments, total no. of period is 36 (18*2), cashflow per period is 35(1000*7%/2) and cashflows are discounted at 4.5% (9/2).

*PVAF = (1-(1.045)^-36)/.045 = 17.666

**PVF = 1 / (1.045)36 = 0.205

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Renfro Rentals has issued bonds that have a 6% coupon rate, payable semiannually. The bonds mature...
Renfro Rentals has issued bonds that have a 6% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000, and a yield to maturity of 5.5%. What is the price of the bonds? Round your answer to the nearest cent.
bond Valuation with Semiannual Payments Renfro Rentals has issued bonds that have a 6% coupon rate,...
bond Valuation with Semiannual Payments Renfro Rentals has issued bonds that have a 6% coupon rate, payable semiannually. The bonds mature in 7 years, have a face value of $1,000, and a yield to maturity of 9.5%. What is the price of the bonds? Round your answer to the nearest cent. $
Bonds issued by American Aero Inc. bear an 8% coupon, payable semiannually. The bonds mature in...
Bonds issued by American Aero Inc. bear an 8% coupon, payable semiannually. The bonds mature in 10 years and have a $1,000 face value. Currently the bonds sell for $675. What is the yield to maturity?
The bonds of a company bear a 13% coupon rate, payable semiannually. The bonds mature in...
The bonds of a company bear a 13% coupon rate, payable semiannually. The bonds mature in 11 years and have a $1,000 face value. Currently, the bonds sell for $924.00. What is the yield to maturity?
The bonds issued by Stainless Tubs bear a 6 percent coupon, payable semiannually. The bonds mature...
The bonds issued by Stainless Tubs bear a 6 percent coupon, payable semiannually. The bonds mature in 11 years and have a $1,000 face value. Currently, the bonds sell for $646. What is the yield to maturity? 3.07 percent 5.92 percent 6.14 percent 11.84 percent
The bonds issued by Greenland Printing Int. has an 8 percent coupon, payable semiannually. The bonds...
The bonds issued by Greenland Printing Int. has an 8 percent coupon, payable semiannually. The bonds mature in 10 years and have a $1,000 face value. Currently, the bonds sell for $932. What is the yield to maturity? a)9.05 percent b) 8.69 percent c) 8.57 percent d)8.28 percent e) 7.89 percent
Just-Buss Corporation has issued a bond that has a 10% coupon rate, payable quarterly. The bonds...
Just-Buss Corporation has issued a bond that has a 10% coupon rate, payable quarterly. The bonds mature in 10 years, have a face value of $1,000 and a yield to maturity of 12%. What is the price of the bond? What must be the price of a $10,000 bond with a 12% coupon rate, semi-annual coupons, and five years to maturity if it has a yield to maturity of 10%?
Meta Corporation has issued bonds that have a 12% coupon rate, payable annually. The bonds mature...
Meta Corporation has issued bonds that have a 12% coupon rate, payable annually. The bonds mature in 5 years, have a face value of 1000$, and YTM of 9%. What is the price of the bonds? please make sure it's correct 100%
Module 3 Bond Valuation Worksheet – Complete in Excel. Please answer the following questions. 1. Renfro...
Module 3 Bond Valuation Worksheet – Complete in Excel. Please answer the following questions. 1. Renfro Rentals has issued bonds that have an 7% coupon rate, payable semiannually. The bonds mature in 10 years, have a face value of $1,000, and a yield to maturity of 8%. What is the price of the bonds? 2. Thatcher Corporation’s bonds will mature in 30 years. The bonds have a face value of $1,000 and an 7% coupon rate, paid semiannually. The price...
14. Bonds that mature in 10 years were recently issued by Smart glass Inc. They have...
14. Bonds that mature in 10 years were recently issued by Smart glass Inc. They have a par value of $1,000 and the annual coupon rate is 5.5%. If the current yield to maturity on similar risk bonds is 7.0%, at what price should the bonds sell? 15. Hamilton Corporation's bonds will mature in 15 years. The bonds have a face value of $1,000 and an 8% coupon rate, paid semiannually. The price of the bonds is $1,050. What is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT