Question
Answer the following questions and put calculations: 11. Find the present value of a perpetuity of $1,500 per year, given a 20% opportunity cost. a.$800
Answer the following questions and put calculations:
11. Find the present value of a perpetuity of $1,500 per year, given a 20% opportunity cost.
a.$800
b.$3,000
c.$300
d.$6,000
e.$7,500
12. If a 30-year, $1,000 bond has a 9% coupon and is currently selling for $826, its current yield is:
a.$90
b.9.0%
c.10.9%
d.12.0%
13. If a bond is selling at par value, which of the following would be the same as its coupon rate:
a.Current Yield
b.Yield to Maturity
c.Market Interest Rate
d.Both b & c
e.All of the above
14. Addleson Corp. has a $1,000 par value bond outstanding that was issued for 30 years 5 years ago at a coupon rate of 15%. The yield on similar bonds is now 12%. What is its price?
a.$1,235.27
b.$2,418.58
c.$836.74
d.$1,236.44
15. A bond is available for purchase that has a face value of $10,000, an 8% coupon, payable semiannually, and 20 years of its original 25 years left to maturity. Approximately how much would you pay for the bond if the market return on similar bonds is 10%?
a.$8,184.60
b.$8,296.88
c.$8,283.64
d.$8,174.36
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started