Compute the present value for each of the following bonds a Priced at the end of its fifth year, a 10 year bond with a face value of $100 and a contract (coupon) rate of 10 per annum (payable at the end of each year) with an effective (required) interest rate of 14 per annum b Priced at the beginni...

a Bond price Present value PV of cash flows both interest payments and principal repayment Present v ...

Compute the present value for each of the following bonds: a. Priced at the end of its

Question:

Compute the present value for each of the following bonds:
a. Priced at the end of its fifth year, a 10-year bond with a of $100 and a contract (coupon) rate of 10% per annum (payable at the end of each year) with an effective (required) interest rate of 14% per annum.
b. Priced at the beginning of its 10th year, a 14-year bond with a of $1,000 and a contract (coupon) rate of 8% per annum (payable at the end of each year) with an effective (required) interest rate of 6% per annum.
c. What is the answer to b if bond interest is payable in equal semiannual amounts?

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...