Rosa Co. issued 2000, 15-year bonds with a face value of $1,000 each on 1 st October
Question:
Rosa Co. issued 2000, 15-year bonds with a face value of $1,000 each on 1st October 2012. The coupon rate was 9% and the required rate of return at the time of issue was 10%. An original investor decided to sell his five bonds on 1st April 2015. Current new issue bonds are offering a coupon rate of 12%, and the required rate of return is 11%.
If calculating the resale value of the bonds:
(a) State the value for P/Y, C/Y, and briefly explain why this value was chosen.
(a) State the relevant coupon interest rate, and briefly explain why this value was chosen
(b) State the relevant value for N, and briefly explain why this value was chosen
(c) State the relevant discount rate, and briefly explain why this value was chosen
(d) Calculate the amount of interest that would be received each year.
College Mathematics for Business Economics Life Sciences and Social Sciences
ISBN: 978-0321614001
12th edition
Authors: Raymond A. Barnett, Michael R. Ziegler, Karl E. Byleen