4) (30 POINTS) On January 12015,Ppet Cr with a face value of $300,000 s er Co. i

Question

4) (30 POINTS) On January 12015,Ppet Cr with a face value of $300,000 s er Co. issued ten-year calable and convertitule bons values are and December and a stated (coupon) interest rate of 12%, payatle sena ruwy 31. The bonds were sold to yeld (market neres, rate) 10% Tel Present value of 1 for 10 periods at 10% Present value of 1 for 10 periods at Present value of 1 for 20 periods at Present value of 1 for 20 periods at 6% Pr Present value of annuity for 10 periods at 10% Present value of Present 326 322 377 312 6.145 5.850 5% value of annuity for 10 periods at 12% annuity for 20 periods at 5% 12.462 ?........................ 11.ATO value of annuity for 20 periods at 6% P Instructions (a) Calculate the issue price of the bonds in dollars. (6) (b) Calculate the issue price of the bonds as a percentage (2)

Explanation / Answer

Amortization Table

(a) Par Value (F) 100 Coupon Rate 12% semi annually YTM 10% No of years 10 No of compunding periods(n)= 10*2 20 Coupon ('C) = 100*12%/2 6 Semi annual yield (0.10/2) (i) 0.05 Bond Price = Present value of coupon + Present value of face value = PV(0.05,20,6,,0) + PV(0.05,20,100,0) = 6*12.462 + 100*0.377 = 112.47 Issue price of bond is $112.47

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.