Appendix B
Appendix D
Appendix C
Problem 13-10 You are given the following information concerning a noncallable, sinking fund debenture: Principal: $1,000 Coupon rate of interest: 8 percent Term to maturity: 15 years Sinking fund: 3 percent of outstanding bonds retired annually; the balance at maturity a. If you buy the bond today at its face amount and interest rates rise to 14 percent after four years have passed, what is your capital gain or loss? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Use a minus sign to enter the loss amount, if any, as a negative value. Round your answer to the nearest dollar. $ b. If you hold the bond 15 years, what do you receive at maturity? -Select- c. What is the bond's current yield as of right now? Round your answer to the nearest whole number. % d. Given your price in a, what is the yield at maturity? Round your answer to the nearest whole number. % e. What proportion of the total debt issue is retired by the sinking fund? Round your answer to the nearest whole number. % f. If the final payment to retire this bond is $1,000,000, how much must the firm invest annually to accumulate this sum if the firm is able to earn 8 percent on the invested funds? Use Appendix C to answer the question. Round your answer to the nearest dollar. $ Interest Factors for the Present Value of One Dollar Time Period (e.g. year) 6% NM 2 3 4 5 1% .990 980 971 961 951 2% 3% .980 971 1961 .943 .942915 .924 .889 .906 .863 4% 1962 .925 .889 .855 .822 5% 952 .907 .864 .823 .784 .943 .890 .840 .792 .747 7% .935 .873 .816 .763 .713 8% .926 .857 .794 .735 .681 9% 917 .842 .772 .708 .650 10% .909 .826 .751 .683 .621 12% .893 .797 712 .636 .567 14% .877 .769 .675 .592 .519 15% .870 .756 .658 .572 497 16% .862 .743 .641 .552 .476 18% .847 .718 .609 .516 437 20% .833 .694 .579 482 402 24% .806 .650 .524 .423 .341 28% .781 .610 .477 .373 .291 6 7 8 9 10 942 888 838 933 871 .813 923 853 .789 914 .837 .766 905 .820 .744 .790 .760 .731 .703 .676 .746 .711 .677 .645 .614 .705.666 630 596 .665.623 583 547 .627 582 .540 .502 .592 .544 .500 460 .558 .508 .463 422 .564 513 467 424 386 .507 452 404 456 400 351 .308 .270 .432 .376 .327 .284 .247 410 .354 .305 .263 .227 .370 .314 .266 .226 .191 .335 .279 .233 .194 .162 .275 .222 .179 .144 .116 .227 .178 .139 . 108 .085 361 322 11 12 13 14 15 .896 .887 .879 .870 .861 .804 .788 .773 .758 .743 .722 .701 .681 .661 .642 .650 .625 .601 .577 .555 .585 .557 .530 .505 .481 .527 497 .469 .442 .417 475 .444 .415 388 .362 429 .397 .368 .340 .315 .388 356 326 .299 .275 .350 .319 .290 .263 .239 .287 .257 .229 .205 .183 .237 .208 .182 .160 .140 .215 .187 .163 .141 .123 .195.162 135 094 .168 137 .112 076 .145 116 .093 061 .125 .099 .078 .049 .108 084 .065 .040 .066 .052 .040 .032 .025 16 17 18 19 20 .853 .844 .836 .828 .820 .728 .714 .700 .686 .673 .623 .605 .587 .570 .554 .534 .513 494 475 456 458 436 416 396 377 .394 .371 .350 .331 .312 339 .292 .317 .270 .296 250 .276 .232 .258 .215 .252 .231 .212 .194 .178 .218 .198 .180 .164 .149 .163 .146 .130 .116 .104 .123 . 108 .095 .083 .073 .107 .093 .081 .070 .061 .093 .071 .054 .032 .019 .080 060 045 026 015 ,069 .051.038 021012 .060 .043 031 .017 .009 .051 .037 .026 .014 .007 25 .780 .610 .478 .375 .295 .233 .184 .146 .116 .092 .059 .038 .030 .024 .016 .010 .005 .002 30 .742 1552 412 308 .231 .174 .131 .099 .075 .057 .033 .020 .015 .012 .007 .004 002 001 Interest Factors for the Present Value of an Annuity of One Dollar Time Period (e.g. 7% year) 1 2 3 4 5 NMetin 1% 2% 3% 4% 5% 6% 8% 9% 10% 12% 14% 16% 18% 20% 24% 28% 32% 36% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.862 0.847 0.833 0.806 0.781 0.758 0.735 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.605 1.566 1.528 1.457 1.392 1.332 1.276 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.246 2.174 2.106 1.981 1.868 1.766 1674 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.798 2.690 2.589 2.404 2.241 2.096 1.966 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.274 3.127 2.991 2.745 2.532 2.345 2.181 6 7 8 9 10 5.795 5.601 5.417 5.242 5.076 4.917 4.766 4.623 4.486 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2.759 2.534 2.399 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.039 3.812 3.605 3.242 2.937 2.678 2.455 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.344 4.078 3.837 3.421 3.076 2.786 2.540 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.985 5.759 5.328 4.946 4.607 4.303 4.031 3.566 3.184 2.868 2.603 9.471 8.983 8.530 8.111 7.722 7.360 7024 6.710 6.418 6.145 5.650 5.216 4.833 4.494 4.193 3.682 3.269 2.930 2.650 11 12 13 14 15 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.988 5.453 5.029 4.656 4.327 3.776 3.335 2.978 2.683 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.197 4.793 4.439 3.851 3.387 3.013 2.708 12.134 11.348 10.635 9.986 9.394 8.534 8.358 7.904 7.487 7.103 6.424 5.842 5.342 4.910 4.533 3.912 3.427 3.040 2.727 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.468 5.008 4.611 3.962 3.459 3.061 2.740 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.060 7.606 6.811 6.142 5.575 5.092 4.675 4.001 3.483 3.076 2.750 16 17 18 19 20 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.312 7.824 6.974 6.265 5.669 5.162 4.730 4.003 3.503 3.088 2.758 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.002 7.120 6.373 5.749 5.222 4.775 4.059 3.518 3.097 2.763 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 5.818 5.273 4.812 4.080 3.529 3.104 2.767 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 5.877 5.316 4.844 4.097 3.539 3.109 2.770 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.514 7.469 6.623 5.929 5.353 4.870 4.110 3.546 3.113 2.772 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873 6.097 5.467 4.948 4.147 3.564 3.122 2.776 30 25.808 22.937 19.600 17.292 15.373 13.765 12.409 11.258 10.274 9.427 8.055 7.003 6.177 5.517 4.979 4.160 3.569 3.124 2.778 Interest Factors for the Future Value of an Annuity of One Dollar Time Period (e.g. year) AWN 2 3 4 5 1% 1.000 2.010 3.030 4.060 5.101 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 4% 1.000 2.040 3.122 4.246 5.416 5% 1.000 2.050 3.152 4.310 5.526 6% 1.000 2.060 3.184 4.375 5.637 7% 1.000 2.070 3.215 4.440 5.751 8% 1.000 2.080 3.246 4.506 5.867 9% 1.000 2.090 3.278 4.573 5.985 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.770 6.353 14% 1.000 2.140 3.440 4.921 6.610 16% 1.000 2.160 3.506 5.067 6.877 20% 1.000 2.200 3.640 5.368 7.442 6 7 8 9 10 6.152 6.308 7.214 7.434 8.286 8.583 9.369 9.755 10.462 10.950 6.468 7.662 8.892 10.159 11.464 6.633 7.898 9.214 10.583 12.006 6.802 8.142 9.549 11.027 12.578 6.975 8.394 9.897 11.491 13.181 7.153 8.654 10.260 11.978 13.816 7.336 8.923 10.637 12.488 14.487 7.523 9.200 11.028 13.021 15.193 7.716 8.115 9.487 10.089 11.436 12.300 13.579 14.776 15.937 17.549 8.536 10.730 13.233 16.085 19.337 8.978 11.413 14.240 17.518 21.321 9.930 12.915 16.499 20.798 25.958 H2BH 11 12 13 14 15 11.567 12.169 12.683 13.412 13.809 14.680 14.947 15.974 16.097 17.293 12.808 14.192 15.618 17.086 18.599 13.486 15.026 16.627 18.292 20.024 14.207 14.972 15.917 16.870 17.713 18.882 19.599 21.051 21.579 23.276 15.784 17.888 20.141 22.550 25.129 16.645 17.560 18.977 20.141 21.495 22.953 24.215 26.019 27.152 29.361 18.531 20.655 21.384 24.138 24.523 28.029 27.975 32.393 31.772 37.280 23.044 27.271 32.089 37.581 43.842 25.732 32.150 30.850 39.580 36.786 48.496 43.672 59.195 51.659 72.035 16 17 18 19 20 17.258 18.639 18.430 20.012 19.615 21.412 20.811 22.841 22.019 24.297 20.157 21.762 23.414 25.117 26.870 21.825 23.698 25.645 27.671 29.778 23.657 25.840 28.132 30.539 33.066 25.673 28.213 30.906 33.760 36.786 27.888 30.84 33.999 37.379 40.995 30.324 33.003 35.950 42.753 33.750 36.974 40.545 48.884 37.450 41.301 45.599 55.750 41.446 46.018 51.159 63.440 45.762 51.160 57.275 72.052 50.980 59.118 68.934 78.969 91.025 60.925 87.442 71.673 105.93 84.140 128.11 98.603 154.74 115.370 186.68 25 28.243 32.030 36.459 41.646 47.727 54.865 63.249 73.106 84.701 98.347 133.33 181.87 249.210 471.98 30 34.785 40.568 47.575 56.085 66.439 79.058 94.461 113.283 136.308 164.494 241.333 356.878 530.310 1181.8
