Barry’s Steroids Company has $1,000 par value bonds outstanding at 14 percent in

Question

Barry’s Steroids Company has $1,000 par value bonds outstanding at 14 percent interest. The bonds will mature in 50 years.

If the percent yield to maturity is 11 percent, what percent of the total bond value does the repayment of principal represent? Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.)

Barry’s Steroids Company has $1,000 par value bonds outstanding at 14 percent interest. The bonds will mature in 50 years.

If the percent yield to maturity is 11 percent, what percent of the total bond value does the repayment of principal represent? Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.)

Explanation / Answer

Present Value of Interest Interest 140 Annuity Factor for 11% for 50years 9.042 PV of Interset 1265.83 Present Value of Principal Principal 1000 DF for 11% at 50th year 0.005 Present Value of Principal 5.42 Total PV of bond 1271.25 Present Value of Principal 5.42 Principal as a percentage of bond price % 0.426

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