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A Historical Bond Problem Banco Medicin's POV Banco Medicii intends to issue some valuable papers called Medicinos. The goal is to raise money for some
A Historical Bond Problem Banco Medicin's POV "Banco Medicii" intends to issue some valuable papers called Medicinos. The goal is to raise money for some of the new investment opportunities they have their eyes on in Scotlandia. They expect to make 35% every year if they did it. So to be "fair!"" to their clients, they offer Medicinos in cuts of 1,000 with the dividends paid every quarter for a nominal interest rate of 12% (as said compounded quarterly) You, the client, of course have no idea of how much money they would be making from the sales of Medicinos so from your point of view, you have the option to pay for a piece of paper (face value 1,000) and cash on the dividends. You know though that this is not a long lasting deal and that the deal ends in 2 years (8 quarters) from the time of issuance (that is also the time you are contemplating to buy it) and that at the end (when the bond matures) you could return the piece of Medicino and get the face value back. You, after consulting with your accountant, realize that at this time, your opportunity cost, your time value of money, your hurdle rate, your MARR, is 15% (effective annual interest rate). Having paid close attention in your 341 class at Universita di Miamiano, you sit down before your computer and open your favorite financial program and crunch some numbers and tell your accountant, Giorgio, that you: Buver's POV Will buy the Medicinos for at most XXX sum of money Will not buy the Medicinos if the bank requires more than XXX Justify your answer, calculate the XXX, and submit your work in an Excel file
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