Problem 6-16

The Town of Hill Valley is issuing a 30-year bond with a face value of $50,000,000 and a stated annual interest rate of 4 percent. The town will make interest payments twice a year.

1. Calculate the semiannual interest payment.

2. Calculate how much Hill Valley will receive from the bond offering under the following conditions:

   1. Market interest rates remain unchanged at the time of the offering.

   2. Market interest rates increase to 4.2 percent at the time of the offering.

Exercise 5- Problem 6-16 1 2 3 Input Par Value of Bond Coup on Rate Intercst Payments per Year Rate per Coupon = coup on rate /# payments Years to Maturity Periods to Maturity= ycars * # payments Market Rate at Time of Offering Market Rate per Coupon = coupon rate / # payments 4 7 8 10 11 12 13 1. Coupon 14 2-a Bond Valuc at Coupon Rate 2-b Bond Value at Market Rate 15 16 17 18 19 20 C 6