Winnie Enterprises Ltd have an outstanding R1 000 par value bond, with 15 years to the...

 

Transcribed Image Text:

Winnie Enterprises Ltd have an outstanding R1 000 par value bond, with 15 years to the maturity date. The bond pays a coupon at a rate of 6% per annum. Required: (i) (ii) (!!!) Calculate the value of the bond, assuming a required rate of return of (a) 4 %, (b) 6% and (c) 8%. For each of the rates of return (a) to (c) you calculated above, indicate whether the bond is selling at a discount, at par or at a premium. Calculate the value of the bond assuming that there is a required rate of return of *%, and that the coupons are paid biannually. Winnie Enterprises Ltd have an outstanding R1 000 par value bond, with 15 years to the maturity date. The bond pays a coupon at a rate of 6% per annum. Required: (i) (ii) (!!!) Calculate the value of the bond, assuming a required rate of return of (a) 4 %, (b) 6% and (c) 8%. For each of the rates of return (a) to (c) you calculated above, indicate whether the bond is selling at a discount, at par or at a premium. Calculate the value of the bond assuming that there is a required rate of return of *%, and that the coupons are paid biannually.

Answer rating: 100% (QA)

i To calculate the value of the bond we can use the present value formula for a bond Bond Value Coup... View the full answer