Homework Answers
Correct answer------------$828
Working
| Bonds issue price is calculated by ADDING the: |
| Discounted face value of bonds payable at market rate of interest, and |
| Discounted Interest payments amount (during the lifetime) at market rate of interest. |
.
| Annual Rate | Applicable rate | Face Value | $ 1,000 | ||
| Market Rate | 12.00% | 6.00% | Term (in years) | 10 | |
| Coupon Rate | 9.00% | 4.50% | Total no. of interest payments | 20 |
.
| Calculation of Issue price of Bond | ||||||||
| Bond Face Value | Market Interest rate (applicable for period/term) | |||||||
| PV of | $ 1,000 | at | 6.00% | Interest rate for | 20 | term payments | ||
| PV of $1 | 0.31180 | |||||||
| PV of | $ 1,000 | = | $ 1,000 | x | 0.31180 | = | $ 312 | A |
| Interest payable per term | at | 4.50% | on | $ 1,000 | ||||
| Interest payable per term | $ 45 | |||||||
| PVAF of 1$ | for | 6.00% | Interest rate for | 20 | term payments | |||
| PVAF of 1$ | 11.46992 | |||||||
| PV of Interest payments | = | $ 45 | x | 11.46992 | = | $ 516 | B | |
| Bond Value (A+B) | $ 828 | |||||||
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An investor purchases a 10-year , $1,000 par value bond that pays semiannual interest of $45....
An investor purchases a 9-year, $1,000 par value bond that pays semiannual interest of $45. If...
An investor purchases a 9-year, $1,000 par value bond that pays semiannual interest of $45. If the semiannual market rate of interest is 6%, what is the current market value of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
An investor purchases a 12-year, $1,000 par value bond that pays semiannual interest of $45. If...
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An investor purchases a 15-year, $1,000 par value bond that pays semiannual interest of $40. If...
An investor purchases a 15-year, $1,000 par value bond that pays semiannual interest of $40. If the semiannual market rate of interest is 5%, what is the current market value of the bond? (FV of $1 PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice Ο $1000. Ο Ο Ο $881.
An investor purchases a 7-year $1,000 par value bond that pays semiannual interest of $40. If...
An investor purchases a 7-year $1,000 par value bond that pays semiannual interest of $40. If the semiannual market rate of interest is 5%, what is the current market value of the bond? (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided.) Multiple Choice 0 $901. 0 $944. O S1000
An investor purchases a 7-year, $1,000 par value bond that pays semianual interest of $40. If...
An investor purchases a 7-year, $1,000 par value bond that pays
semianual interest of $40. If the semianual market rate of interest
is 5%, what is the current market value of the bond?
15 current market value of the bone ASLASSEYASIDSLESVOS provided) $901 $944 $1000
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Sand Explorers issues bonds due in 10 years with a stated interest rate of 8% and a face value of $150,000. Interest pay...
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Mind Explorers issues bonds with a stated interest rate of 8%, face value of $180,000, and due in 10 years. Interest payments are made semi- annually. The market rate for this type of bond is 7%. Using present value tables, calculate the issue price of the bonds. (FV of $1, PV of $1. FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $192,792. $180,000 oooo $146,426. $167,769.
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An investor purchases a 9-year, $1,000 par value bond that pays semiannual interest of $45. If the semiannual market rate of interest is 6%, what is the current market value of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
An investor purchases a 12-year, $1,000 par value bond that pays semiannual interest of $45. If the semiannual market rate of interest is 5%, what is the current market value of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Ο $969. Ο $1,000. Ο $931. Ο $1,621.
An investor purchases a 15-year, $1,000 par value bond that pays semiannual interest of $40. If the semiannual market rate of interest is 5%, what is the current market value of the bond? (FV of $1 PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice Ο $1000. Ο Ο Ο $881.
An investor purchases a 7-year $1,000 par value bond that pays semiannual interest of $40. If the semiannual market rate of interest is 5%, what is the current market value of the bond? (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided.) Multiple Choice 0 $901. 0 $944. O S1000
An investor purchases a 7-year, $1,000 par value bond that pays
semianual interest of $40. If the semianual market rate of interest
is 5%, what is the current market value of the bond?
15 current market value of the bone ASLASSEYASIDSLESVOS provided) $901 $944 $1000
Sand Explorers issues bonds due in 10 years with a stated interest rate of 6% and a face value of $210,000. Interest payments are made semi-annually. The market rate for this type of bond is 5%. Using present value tables, calculate the issue price of the bonds. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $177,569. $226,369. Loooo $264,081. $210,000.
Mind Explorers issues bonds with a stated interest rate of 8%, face value of $180,000, and due in 10 years. Interest payments are made semi- annually. The market rate for this type of bond is 7%. Using present value tables, calculate the issue price of the bonds. (FV of $1, PV of $1. FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $192,792. $180,000 oooo $146,426. $167,769.
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