Bond Calculation Exercise The Government of Canada is issuing a new 4 year Bond Today to...

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Bond Calculation Exercise The Government of Canada is issuing a new 4 year Bond Today to yield 10% annually. We wish to purchase $10,000 of the issue. How do we prove it is worth that amount to us? Year Period Rate Payment Amount 112 CM 3+++ 2 3 4 N I FV 1 5% 2 5% 3 5% 4 5% 5 5% 6 5% 67 7 5% 8 5% 5% 00 8 500 500 500 500 500 500 500 500 10,000 Present Value PV (PV of Cash Flows) (PV of Capital repaid) 0.00 (PV of Flows & Capital) Bond Calculation Exercise The Government of Canada is issuing a new 4 year Bond Today to yield 10% annually. We wish to purchase $10,000 of the issue. How do we prove it is worth that amount to us? Year Period Rate Payment Amount 112 CM 3+++ 2 3 4 N I FV 1 5% 2 5% 3 5% 4 5% 5 5% 6 5% 67 7 5% 8 5% 5% 00 8 500 500 500 500 500 500 500 500 10,000 Present Value PV (PV of Cash Flows) (PV of Capital repaid) 0.00 (PV of Flows & Capital)

Answer rating: 100% (QA)

To calculate the present value of the bond cash flows you need to discount each future cash ... View the full answer