Question: Please show work, I'm not getting the right answer, apparently I'm entering the wrong key on my calculator. 1.Corporation sold a 25-year, 12% annual coupon

Please show work, I'm not getting the right answer, apparently I'm entering the wrong key on my calculator.

1.Corporation sold a 25-year, 12% annual coupon bond at a par value of $1,000 in April 2007.In April 2017, the bond's yield to maturity (YTM) is 10%. What is the value or Present Value or Vb of the bond?

Present Value = pv(rate, nper,pmt,fv)

Nper(indicates the period) = 25

PV (indicates the price) = ?

PMT (indicate the annual payment) = 1000*12% = 120

FV (indicates the face value) = 1000

Rate (indicates YTM) = 10%

Present Value = pv( 10%,25,120,1000)

Present Value = $ 1375.00

2.Now assume the same bond as above but with semiannual interest payments.What is the value or (PV) or (Vb) of the bond.

Present Value = pv(rate, nper,pmt,fv)

Nper(indicates the period) = 25*2 = 50

PV (indicates the price) = ?

PMT (indicate the semi annual payment) = 1000*12%*1/2 = 60

FV (indicates the face value) = 1000

Rate (indicates YTM) = 10%*1/2 = 5%

Present Value = pv( 5%,50,60,1000)

Present Value = $ 1376.00

3.The Kalodop Corporation issues 11% annual coupon bonds that pay $1,000 at maturity.These bonds mature in 10 years.What is the value (PV) or (Vb) of the bonds if the current or market or prevailing or going or YTM is 9%.

4.Now assume that the current or market or prevailing or going or YTM rate is 12% on the bond in #3 above.What is its Vb or PV?

5.Now assume that the current or market or prevailing or going or YTM rate is 8% on the bond in #3 above.What is its Vb or PV?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!