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Bond Valuation and IRR Part Two 1. Bond Valuation IBM 8s 40 FA V. = ?,F - $1,000, CR (coupon rate) = 8%, m =
Bond Valuation and IRR Part Two 1. Bond Valuation IBM 8s 40 FA V. = ?,F - $1,000, CR (coupon rate) = 8%, m = 2 (semiannual), and i, (discount rate) = 10% (mr). P-PV (CF) = PV (Int; F) = PV (ann) + PV (Is) = PMT (PVIFA) + F (PVIF) VALUE=Price => solve for the price you are willing to pay with a 10% required return. 2. Internal Rate of Return IBM 10 30 JJ $1.297.55 - INT (PVIFA)+F(PVIF) - $1.152.47 = INT (PVIFA) + Face (PVIF) wherein err - irr to make the equation true err: $1,297.55 - (INT/2)(1-((1/(1+in/2)*")/(irr/2) + F((1+(int/2))) Using the price as $1,297.55 = V.. calculate the Internal Rate of Return for the investment
Bond Valuation and IRR
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