Consider a B/P with a face value of $200,000, a 12% annual coupon rate payable semi-annually, a maturity of 5 years, and a market yield of 16% annual.

Required.

a.

What is the price of the bond (at issuance)? 5 marks

b.

Construct the amortization table for year 1. 5 marks

c.

What is the interest expense for year 1? 5 marks

2.

15 marks

Consider a B/P with a face value of $200,000, a 12% annual coupon rate payable quarterly, a maturity of 5 years, and a market yield of 16% annual.

Required.

a.

What is the price of the bond (at issuance)? 5 marks

b.

Construct the amortization table for year 1. 5 marks

c.

What is the interest expense for year 1? 5 marks