please show how to do the problem. If a financial calculator can be used, please show how. thank you
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 6 years, a par value of $1.000, and a yield to maturity of 6.80% The first bond is issued by Crabbe Waste Disposal and has a coupon Interest rate of 6.327% paid annually. The second bond, issued by Malfoy Enterprises, has a coupon interest rate of 8.90% paid annually a. Calolate the selling price for each of the bonds b. Mark has $20,000 to invest if he wants to invest only in bonds issued by Crabbe Waste Disposal, how many of those bonds could he buy? What he wants to invest only in bonds issued by Malfoy Enterprises c. What is the total interest income that Mark could earn each year the invested only in Crabbe bonds? How much interest would he earn each year the invested only in Malfoy bonds? d. Assume that Mark wil roinvest 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 Merk will accumulate over 6 year who invests in Crabbe bonds or Malfoy bonds. Your total calulation 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 e. The bands issued by Cribbe and Malfoy might appear to be equally good investments because they offer the same yield to mabunty of 6.80% Notice, however, that your answers to part d are not the same for each bond, suggesting that one bond is a better investment than the other. Why is that the case? a. The selling price for the Crabbe Waste Disposal bond is $ (Round to the nearest cent) The soling price for the Malfoy Enterprises bond is $ Round to the nearest cent.) b. The number of Crabbe Waste Disposal bond issues Mark could purchase is issues (Round down to the nearest whole number) The number of Malfoy Enterprises bond issues Mark could purchase is issues. (Round down to the nearest whole number) c. The yearly interest income of the Crabbe Waste Disposal bond is $ (Round to the nearest cent) The yearly interest income of the Malfoy Enterprises bond in $ (Round to the nearest cont.) d. Mark invests in the Crabbo We Disposal bond, the value of the principal payment plus the value of his reinvestment account per bond is $ i Mare Invests in the Malloy Enterprises bond, me value of the prindpal payment plus the value of his reinvestment account per bond as f .. Why are the two values calculated in par different? The dance le due to the differences in (1) received each year. (Belect from the drop-down menu.) (Round to the nearest cont) (Round to the nearest cent) Mark would be better off investing in (2) (Select from the drop down menu. 12) Malfoy Enterprises Crabbe Waste Disposal (1) Internet payment O required retums seling prices Oyaid to matunties
