Please answer the following questions.

1-5.

i will be using the answers ro make/present a powerpoint.

Please show all calculations and steps neeced to find the answers.

please use the following formulas/examples to calculate the value of the bond.

Figure 10.4 steps in Pricing a bond The first step is to identify the amounts and the timing of the two types of future cash flows to be recelved on the bond. Any bond that pays interest or coupon payments (coupon bonds) will have two sources of future cash flow to its bondholderfinvestor: the periodic coupon payments, which are a form of annuity, and the final furmp sum payment of the face value amount at maturity. As discussed above, the principal or face value is paid in a one-time lump sum payment at bond maturity. In our example with 3MCo, this is the $1,000 par value of the bond that will be paid on the maturity date of September 19, 2026. Step 1 is to lay out the timing and amount of the future cash flows. The first future cash flow we need to determine is the annual interest payment. Here, it is the coupon rate of 2.25% times the par value of the bond. As mentioned above, we will use $1,000 as the par value of this bond, so the annual coupon or interest payment will equal $22.50 : ParValueAnnualCouponRate=AnnualCouponPayment$1,0002.25%$22.50 The next future cash flow that we need to determine is the payment of the par value or principal-in this case, the $1,000 par value of the bond - at the maturity date of September 19, 2026. We can set out the future cash flows for the bond as shown in Iable 10.2: Table 10.2 September 19, 2026. At this point, we can apply previously leaned concepts the coupon payments constitute an annuity stream, or payments of the same amount at regular intervals The princlpai of $1,000 is also paid out at maturity. Here, we recognize another key concept the final amount is a lump sum payment: So, wo now have the promised set of future cash flows for the 3MCo, bond In Step 2, we will need to decide on a discount rate to use on these future bond cash paymerits. For now, we will jump to the answer and simply use the YTM of 1.24% from the bond data in Iable 10.1. Later in the chapler, we will develop the concepts behind how an appropriate discount rate is determined. For Step 3, we now apply two equations to the set of future cash flows from the bond. This will then provide us with the present values of these cash filows, or the expected present-day value of the bond. Beciause we know that the coupon payments constitute an annuify stream, we can use the equation for the prescht value of an annuty. idiscussed in Time Value of Monex il: Equal Murtioln Paxmente, To value the one-time par valuo parment, we ube the equation for the present value of a lump sum payment, So, by combining these, we will huve the present value of the coupon payment strearm, or CouponPaymentAmountr[1(1+r)1]PCompon So, for our example above, this becomes $22.5013.61099$306.25 103 Next, we need to determine the present value of the payment of the par or fact value of fro bond at intatuity. Dhis? is calculated as follows: ParValue(1+r)n1=P2y10 Inserting our values into this formula gives us $1,000(1+0.0124)151$1,0000.831224 Adding the present values of the two payment streams gives us $306.25+$831.22$1,137.47 Our bond pice is $1,137.47. This bond price represents the value of the financial asset to both a willo buyer and a willing solier. In this example, the willing seller is 3M Company. The willing buyer is an investor who is demanding a 1.24% yield on the investment. As per Jable 10.1 above, the 3M bond sold for $1,061.20 in March 20021. Howeves, wo display the price as a percentage of the par value, so we have the displiayed price as $1,000$1,051.20=1.05120or105.120% 10.8 Thus module examined the variables that determiaed bond valuations and some of their relationships. In this assigniment you are asked to develop a voice-over PowerPoint presentation on bond valuation explaining the variables and calculations involved. Show your step-by-step calculations and explantitions cfearfy in your submission. The following may act as a guide when developing your PPT Exercise 1: Bond Variables: - Face Value (P): $1,000 - Coupon Rate (1) 7% ( 0.07 as a decimal) - Time to Maturity (T) 10 years - Yield to Maturity (Y)6% (0.06 as a decimal) Caleulate the value of the boed using the bond valuation formula discussed in the reading. Show all your calculations step-by-step and provide the fital bond value Exercise 2: Proving the Answer Using the bond details from Exercase 1, prove the correctness of your calculated bond value. Caleulate the present value of all fofure cash flows and verify if it matches the bond value Show all your calculations itep-by-step and provide a brief explanation of your results. Exercise 3: Interest Rate Sensitivity Explain how the bond value is affected when a) The coupon rate (b) increases while the yaeld to maturity (Y) remains the same b) The yield to maturity (X) decteases while the coupon rate (i) remains the same Fxertise 4: Real World Bond Example Research and find a real world example of a bond ssued by a company or goverrment. Provide the bond details (face value, bond for the issuer and investors. Frercise 5: Discussion Question In your own words, explais why bond valuation in important for both investors and asuers. Dascuis the factors that influence a bonds value in the market. Subraission Guidelises: - Prepare your answers in a clear and organized manner. - Show all calculations atep-by-step to receive fall credt - Submit your completed assignment as a document or PDF filo Remember to use the voicejover PoverPoint presentation and the knowledge from your Financial Matiagenent text to complete this assignmeat uiccesifally