K Bond valuation and yield to maturity Personal Finance Problem Mark Goldsmith's broker has shown him two bonds issued by different companies. Each has a maturity of 5 years, a par value of $1,000, and a yield to maturity of 7.90%. The first bond is issued by Crabbe Waste Disposal and has a coupon interest rate of 6.323% paid annually. The second bond, issued by Malfoy Enterprises, has a coupon interest rate of 8.90% paid annually. a. Calculate the selling price for each of the bonds. b. Mark has $18,000 to invest. If he wants to invest only in bonds issued by Crabbe Waste Disposal, how many of those bonds could he buy? What if he wants to invest only in bonds issued by Malfoy Enterprises? c. What is the total interest income that Mark could earn each year if he invested only in Crabbe bonds? How much interest would he earn each year if he invested only in Malfoy bonds? d. Assume that Mark will reinvest all the interest he receives as it is paid and that his rate of return on the reinvested interest will be 9%. Calculate the total dollars that Mark will accumulate over 5 years if he invests in Crabbe bonds or Malfoy bonds. Your total calculation will include the interest Mark gets, the principal he receives when the bonds mature, and all the additional interest he earns from reinvesting the coupon payments he receives. a. The selling price for the Crabbe Waste Disposal bond is $ (Round to the nearest cent.) K Bond valuation-Semiannual interest Find the value of a bond maturing in 4 years, with a $1,000 par value and a coupon interest rate of 8% (4% paid semiannually) if the required return on similar-risk bonds is 17% annual interest (8.5% paid semiannually). The present value of the bond is $ (Round to the nearest cent.) K Bond valuation-Semiannual interest Calculate the value of each of the bonds shown in the following table, all of which pay interest semiannually. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Bond Par Value Coupon interest rate Years to maturity Required stated annual return A $500 9% 8 B 500 14 15 8% 13 C 100 13 5 13 The value of bond A is $. (Round to the nearest cent.) K Bond valuation - Quarterly interest Calculate the value of a $500-par-value bond paying quarterly interest at an annual coupon interest rate of 11% and having 12 years until maturity if the required return on similar-risk bonds is currently a 16% annual rate paid quarterly. The present value of the bond is $ (Round to the nearest cent.)