Kilgore Natural Gas has a $1,000 par value bond outstanding that pays 11 percent

Question

Kilgore Natural Gas has a $1,000 par value bond outstanding that pays 11 percent annual interest. The current yield to maturity on such bonds in the market is 13 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods Compute the price of the bonds for these maturity dates: (Do not round intermediate calculations. Round your final answers to 2 decimal places. Assume interest payments are annual.) Bond Price a. 25 years b. 20 years c 2 years

Explanation / Answer

I used the pV formula in excel

PV(0.13,25,-110,-1000,0)

Value of preferd stock is given by

=14.55/.11 =132.27

25 853.40 20 859.50 2 966.64

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