Question
Please show work, I'm not getting the right answer, apparently I'm entering the wrong key on my calculator. 1.Corporation sold a 25-year, 12% annual coupon
Please show work, I'm not getting the right answer, apparently I'm entering the wrong key on my calculator.
1.Corporation sold a 25-year, 12% annual coupon bond at a par value of $1,000 in April 2007.In April 2017, the bond's yield to maturity (YTM) is 10%. What is the value or Present Value or Vb of the bond?
Present Value = pv(rate, nper,pmt,fv)
Nper(indicates the period) = 25
PV (indicates the price) = ?
PMT (indicate the annual payment) = 1000*12% = 120
FV (indicates the face value) = 1000
Rate (indicates YTM) = 10%
Present Value = pv( 10%,25,120,1000)
Present Value = $ 1375.00
2.Now assume the same bond as above but with semiannual interest payments.What is the value or (PV) or (Vb) of the bond.
Present Value = pv(rate, nper,pmt,fv)
Nper(indicates the period) = 25*2 = 50
PV (indicates the price) = ?
PMT (indicate the semi annual payment) = 1000*12%*1/2 = 60
FV (indicates the face value) = 1000
Rate (indicates YTM) = 10%*1/2 = 5%
Present Value = pv( 5%,50,60,1000)
Present Value = $ 1376.00
3.The Kalodop Corporation issues 11% annual coupon bonds that pay $1,000 at maturity.These bonds mature in 10 years.What is the value (PV) or (Vb) of the bonds if the current or market or prevailing or going or YTM is 9%.
4.Now assume that the current or market or prevailing or going or YTM rate is 12% on the bond in #3 above.What is its Vb or PV?
5.Now assume that the current or market or prevailing or going or YTM rate is 8% on the bond in #3 above.What is its Vb or PV?
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