Question
I don't have an accounting calculator and wondered how solve this question using excel. Lance Whittingham IV specializes in buying deep discount bonds. These represent
I don't have an accounting calculator and wondered how solve this question using excel.
Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond with semi-annual payments has 4 percent annual interest and has 16 years remaining to maturity. The current yield to maturity on similar bonds is 10$.
Solve for the following using excel:
a. What is the current price of the bonds?
b. By what percent will the price of the bonds increase between now and maturity?
c. What is the annual compound rate of growth in the value of the bonds?
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