Bond Problems 1. (Current Valuation) The McPatrick Corporation issued a 30-year bond five years ago. The bond has a 10 percent coupon interest rate (paid semi-annually) and a $1,000 par value. The required annual return for bonds of similar risk is 9 percent. What is the value of the bond today? What is the value of the bond 10 years from now (assuming that the required rate of return remains at 9 percent)? 2. (Current Valuation) Memphis Mud Pie Co. has a $1,000 par value that matures in 7 coupon rate on this semiannual bond is 9 percent. If the required rate of return is 8 percent, what is the value of the bond today? 3. (Current Valuation) You intend to purchase a 10-year $1,000 par value bond that pays interest every 6 months. If the required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? 4. (Curren valuation) Assume that today you buy a bond paying a coupon rate of 10% per year with semiannual payments when the market return (or yield to maturity) is $% per year. The bond has three years until maturity. Its par value is S1,000. What is the bond's expected price today? What is the expected price two years from today assuming that the expected return remains at 8%? 5. (Zero coupon) Three Rivers Airways has a zero-coupon bond outstanding with 8 years outstanding. The required rate of return is 7%. The par value is$1,000. what is the bond's expected price? 6. (Yield to maturity) Jerry's Spaghetti Factory issued 12-year bonds two years ago at a coupon rate of 9.5 percent. The bonds make semiannual payments. If the bonds currently sell for 96 percent of par value, what is the yield to maturity? (Yield to maturity) The 10 percent semiannual bond of Robinson Sporting Goods, Inc. is selling for $1,200. If the par value of the bond is $1,000, what is the yield to maturity if the bond has 17 years left until maturity? 7. (Yield to maturity) A ten-year bond is priced at S845, and its coupon rate is 5% Assuming semiannual payments and a $1,000 par value, what is the yield to maturity? 8, (Yield to Call) The Rodriguez Company issued a 30-year, 9% semiannual payment bond 2 years ago. What is the yield to call if the bond could originally be called for $1,075 5 years after issuance and is currently for $950? 9, 10. (Yield to Call) Solar Panel Expo just issued a 7.5% coupon bond that has 10 years until maturity. The bonds can be called 4 years after issuance. The company will pay a 5% premium if the bonds are called prior to maturity. The par value is $1,000, and the bonds pay semiannual interest. The bonds sell today for $1,065. What is the bond's yield to call
