1) BA Corp is issuing a 10-year bond with a coupon rate of 8.13 percent. The int
ID: 2768095 • Letter: 1
Question
1) BA Corp is issuing a 10-year bond with a coupon rate of 8.13 percent. The interest rate for similar bonds is currently 4.35 percent. Assuming annual payments, what is the value of the bond? (Round answer to 2 decimal places, e.g. 15.25.)
2) Nanotech, Inc., has a bond issue maturing in seven years that is paying a coupon rate of 11.0 percent (semiannual payments). Management wants to retire a portion of the issue by buying the securities in the open market. If it can refinance at 9.5 percent, how much will Nanotech pay to buy back its current outstanding bonds? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25.)
Explanation / Answer
Answer:1) Bond Price=$81.3*PVIFA(4.35%,10)+$1000*PVIF(4.35%,10)
=$1301.32
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.