e. Your case company has an issue of $1,000 par value annual coupon bonds with 6 years remaining until maturity. The annual coupon rate is given in Table 1, along with the current price of the bonds. What is the yield to maturity on the bonds?
f. Your company has an issue of $100 par value bonds that offer a 5% coupon rate paid semi-annually. The bonds have 4 years remaining until maturity. The market’s required return on these bonds is given in Table;

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Table 1: Case company data (hypothetical except where noted) Harvey Norman (HVN) $15,897.00 $536.00 Payment per month Annual total revenue ($millions)¹ Annual growth in total revenue² Loan A (APR, compounding frequency) Loan B (APR, compounding frequency) Loan C (APR, compounding frequency) Property cost 6 year bond annual coupon rate Adairs Breville (BRG) (ADH) $4,359.00 $2,050.00 $760.00 $344.40 10.70% 3.93%, monthly 4.00%, semi- annually 3.91%, daily³ 5.15% 15.50% 3.02%, semi- annually $1,111.50 2.85%, monthly 2.95%, quarterly 4.35% $956.60 $2,234.10 $268.00 8.10% 4.90% 2.48%, quarterly 2.45%, daily³ 2.52%, semi- annually $1,540,000 $2,910,000 $9,950,000 $760,000 3.95% Nick Scali (NCK) $1050.50 12.40% 4.80% 4.26%, semi- annually 6 year bond current price 4 year bond required rate of 3.40% return Data from S&P Capital IQ for the company's most recent financial year. 2 Most recent 5 year historical CAGR from S&P Capital IQ 3 Assume a 365-day year 4.25%, quarterly 4.24%, daily ³ 4.90% $980.95 4.10% Beacon Lighting (BLX) $891.00 $247.70 9.90% 5.45%, monthly 5.50%, semi- annually 5.40%, daily ³ $1,650,000 5.85% $922.00 5.80% Super Retail (SUL) $11,500.00 $2,711.40 5.30% 6.00%, semi- annually 5.95%, monthly 5.97%, quarterly $840,000 4.55% $1,077.00 3.90% Table 1: Case company data (hypothetical except where noted) Harvey Norman (HVN) $15,897.00 $536.00 Payment per month Annual total revenue ($millions)¹ Annual growth in total revenue² Loan A (APR, compounding frequency) Loan B (APR, compounding frequency) Loan C (APR, compounding frequency) Property cost 6 year bond annual coupon rate Adairs Breville (BRG) (ADH) $4,359.00 $2,050.00 $760.00 $344.40 10.70% 3.93%, monthly 4.00%, semi- annually 3.91%, daily³ 5.15% 15.50% 3.02%, semi- annually $1,111.50 2.85%, monthly 2.95%, quarterly 4.35% $956.60 $2,234.10 $268.00 8.10% 4.90% 2.48%, quarterly 2.45%, daily³ 2.52%, semi- annually $1,540,000 $2,910,000 $9,950,000 $760,000 3.95% Nick Scali (NCK) $1050.50 12.40% 4.80% 4.26%, semi- annually 6 year bond current price 4 year bond required rate of 3.40% return Data from S&P Capital IQ for the company's most recent financial year. 2 Most recent 5 year historical CAGR from S&P Capital IQ 3 Assume a 365-day year 4.25%, quarterly 4.24%, daily ³ 4.90% $980.95 4.10% Beacon Lighting (BLX) $891.00 $247.70 9.90% 5.45%, monthly 5.50%, semi- annually 5.40%, daily ³ $1,650,000 5.85% $922.00 5.80% Super Retail (SUL) $11,500.00 $2,711.40 5.30% 6.00%, semi- annually 5.95%, monthly 5.97%, quarterly $840,000 4.55% $1,077.00 3.90%

Answer rating: 100% (QA)

e Yield to maturity of the bonds We know the Face value of the bond 1000 years to maturity 6 curr... View the full answer