Problems - Investments Problem 13-08 Bond A has the following terms: Coupon rate of interest (paid annually): 12 percent Principal: $1,000 Term to maturity: Ten years Bond B has the following terms: Coupon rate of interest (paid annually): 6 percent Principal: $1,000 Term to maturity: Ten years a. What should be the price of each bond if interest rate is 12 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. Price of bond A: $ Price of bond B: $ b. What will be the price of each bond if, after three years have elapsed, interest rate is 12 percent? Use Appendix B and Appendix D to answer the question, Round your answers to the nearest dollar Price of bond A: $ Price of bond B: 5 c. What will be the price of each bond if, after ten years have elapsed, interest rate is 9 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. Price of bond A: $ Price of bond B: $ Check My Work ( remaining) Interest Factors for the Present Value of One Dollar Time Period 1 2 | Tel 7th 10. 1514 990 980 971 962 952 943 935 926 97 909 893 980961993 95 90/890 81 85 82 8269 ) DOTA6431 694 650 1.610 197199599 Em BA08162 172 1675 658 1609 59 524 477 1961 924 889 85 823 792_763 75 708 683 636 592 52 552 516 482 (423 373 1951906 863 S2 T8 47 713681 650 52 567 59 497 476 437 402 | 34191 1942 888 838 790 746705 666 630 596 1.456 432 410 370 871813760 71| 665 547 400 1376 354 314 1982 351 1.327 305 | 266 914 837766703 645 92 544 500 424 361308 284 263 1226 905 820 744 676 614 558 508 463 | 386 322 270 247 227 191 162 1085 | 460 123 4s 6789w=BBB B | 137 | 112 100 1896 804722650 585 27 475 170 388 350 287 237 25 15 162 135 1.094 DEE BBI TAB 701 2018 187 168 076 052 870 77368] 1.60] 530 460 45 368 1326 163 145 116 061 | DAC 1870 58 66] 57 505 aa2 | 3RD 299 1160 141 15 1099 1078 (049 | 032 15861 43 642555 48] 417362 3 25 20183 140 173 108 | 084 065 1040 025 8S3128673 54 58 31 33020252 218 163 123 10709300 019 1844714605 513436 371 317 23 1981db108093080060 (045 83600 387494 416 350 796 250 212 180 130005081069 05] 1038 182858650 145396 331 | 276 232 1083 070 060 043 20120 G73554 456 377 31235B 25 1TB 149 104 013 061051 037026 01 007 18010 478 375 2013 14 146 16 092 0.0 034 030 024 016 00 006 0021 12308 21 14 131 000 075 05:00 020 0 0 00000 002 001 031 Interest Factors for the Present Value of an Annuity of One Dollar eriod earl 1 2 3 4 5 1% 2% 3% 4% 5% 6% 7 9% 10% 12% 14% 16% 18% 20% 24% 289 320 35% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.862 0.847 0.833 0.806 0.781 0.758 0.735 1.970 1.942 1.913 1.86 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.605 1.566 1.528 1.457 1.392 1.332 1.276 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.246 2.174 2.106 1.981 1.868 1.766 1.674 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.798 2.690 2.589 2.404 2.241 2.096 1.966 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.274 3.127 2.991 2.745 2.532 2.345 2.181 6 7 8 9 10 5.795 5.601 5.417 5.2425.076 4.917 4.766 4.623 4.486 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2.759 2.534 2.399 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.039 3.812 3.605 3.242 2.937 2.678 2.455 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.344 4.078 3.837 3.421 3.076 2.786 2.540 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.985 5.759 5.328 4.946 4.607 4.303 4.031 3.566 3.184 2.868 2.603 9.471 8.983 8.530 8.111 77227.360 7024 6.710 6.418 6.145 5.6505.216 4.833 4.494 4.193 2.682 3.269 2.930 2.650 11 12 12 14 15 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.988 5.453 5.029 4.656 4.327 3.776 3.335 2.978 2.683 11 255 10575 9 954 9 385 8 863 8.384 7943 7536 7.161 6.814 6.194 5.660 5.197 4.793 4.439 3.851 2387 2013 2.708 12.134 11348 10.635 9086 9.394 8.534 8.358 7.904 7.487 7.103 6.424 5.842 5.342 4.910 4.533 3.9123427 3040 2727 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.468 5.008 4.611 3.962 3.459 3.061 2.740 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8,060 7.606 6.811 6.142 5.575 5.092 4.675 4.001 3.483 3076 2.750 16 17 18 19 20 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.312 7.824 6.9746.265 5.669 5.1624.730 4.003 3.503 3088 2.758 15 562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.00271206.373 5.749 5.222 4.775 4.059 3.518 23.097 2.763 16 398 14.992 13.754 12 659 11.690 10.828 10.059 9.3728.756 8.2017.250 6.467 5.818 5.273 4812 40803529104 2.767 17226 15.678 14 324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 5.877 5.316 4.844 4097 3539 3.109 2770 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.5147469 6.623 5.9295.353 4.870 4.110 3.546 3.113 2.772 25 30 22.023 1952317413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873 6.097 5.467 4948 4.147 3.564 3.122 2.776 25.808 22.937 19.600 17.292 15 373 13.765 12.409 11.258 10.274 9.427 8.055 7003 6.177 5517 4979 4.160 3.569 3.124 2778 Interest Factors for the Present Value of an Annuity of One Dollar Period le 1 2 3 4 5 % 6% 7% 8% 9% 10% 12% 14% 16% 18% 20% 24% 28% 32% 36% 0.990 0.980 0,971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.862 0.847 0.833 0.806 0.781 0.758 0.735 1970 1942 1913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.605 1.566 1.528 1.457 1.392 1.332 1.276 2941 2884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2402 2.322 2.246 2.174 2.106 1.981 1.868 1.766 1.674 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.798 2.690 2.589 2.404 2.241 2.096 1.966 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.274 3.127 2.991 2.745 2.532 2.345 2.181 6 5.795 5601 5.417 5.242 5.076 4.917 4.766 4.623 4.486 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2.759 2.534 2.399 7 6.728 6,472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.039 3.812 3.605 3.242 2.937 2.678 2.455 8 76527325 7020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.344 4.078 3.837 3.421 3.076 2.786 2.540 9 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.985 5.759 5.328 4.946 4.607 4.303 4.031 3.566 3.184 2.868 2.603 109.471 8.983 8.530 8.111 7722 7360 7024 6.710 6.418 6.145 5.650 5.216 4.833 4.494 4.193 3.682 3.269 2.930 2.650 1110.368 0.787 9.253 8.760 8.306 78877.4997139 6.805 6.495 5988 5.453 5.029 4.656 4.327 3.776 3.335 2978 2.683 12 11.255 10.575 9.954 9.385 8.863 8.384 7943 7.536 7.161 6.814 6.194 5.660 5.197 4.793 4.439 3.851 3.387 3.013 2.708 13 12.134 11 348 10.635 9 986 9.394 8.534 8 358 7904 7.487 7.103 6.424 5.842 5.342 4.910 4.533 3.912 3.427 3.040 2.727 1413004 12.106 11.296 10.563 9.899 9.295 8.745 8.2447.786 7.367 6.628 6.002 5.468 5.008 4.6113.962 3.459 3.061 2.740 1511865 12.849 11938 11118 10 380 9.712 9.108 8.559 8.0607606 6.811 6.142 5.575 5.092 4.675 4.001 3.482 2076 2750 16 14.718 13.578 12 561 11,652 10.838 10.106 9.447 8.851 8.3127824 6.974 6.265 5.669 5.162 4.730 4.001 3503 3.088 2.758 17 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.002 7.120 6.373 5.749 5.222 4.775 4.059 3.518 3.097 2.763 18 16 398 14992 13.754 12.659 11.690 10.828 10.059 9:372 8.756 8.2017.250 6.467 5.818 5.273 481240RO 3529 3.104 2.767 1917.226 15.678 14 324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7366 6.550 5.877 5.316 4.844 4.097 3.539 3.109 2.770 2018.046 16 351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.514 7469 6.623 5929 5.353 4.870 4.110 3.546 3.113 2.772 25 22.023 1952317413 15 622 14.094 12.783 11.654 10.675 9.8239.077 7.843 6.873 6.097 5.467 4.948 4.147 3.564 3.122 2776 30 25 808 22937 19.600 17.292 15 373 13.765 12.409 11258 10.274 9.427 8.05570036.177 5.517 4979 4.160 3.569 3.124 2778 Interest Factors for the Present Value of One Dollar Period (1.9- - 1 1 3 4 - W W W . 70. 0. 12% 4% 3% 6% 18% 0 24 90990 971962 952 943 95 92691799 80 87 870862 847.833.606781 980 961991 925 907890 873 853 B42 826797 78 756 43 718 694 650 610 971 942915889 864 840 816 1994 72 71 72 75 658 64] | 609 59 524 477 961 924869-855823792_763735 08.683636 592 52 552 516 482 423373 951906 363.822784747 13 687 1.650 521 567 | 59.497476 437402 341791 122 6 942 888 838 790_746705 666 630596 54 507 456 793387181 760711665 623583 547 513 452 400 923 853 79 31 67.627582 467 404 9148377660 645 5925ad 500 460 474 361 308 905 820 744 676 614 558 508 463 422 386 322 270 432 410 370 354 314 305 1266 284 263 | 226 247 227 191 335 279 233 194 162 1275 179 .144 | 16 227 .178 .19 .108 .085 12345 6789m npBBB % % w 1 996 804 22 550 585 527 475 429 388 350 287 237 215 195 162 135 1094 066 12887788,701 5 57 97 444 397 356 319 257 1.168 137 112 19879 78 681 601 530 469 415 368 326 290 229 182 .163 145 116 1.093 2040 1870 758661 57 505 442388 340 299 | 160 141 125 1099 1078 86! 43 642 555 481 417 362 315 239183 140 123 .108 084 065 16 53 28 23 534 458 4 39 292 252 218 163 123 107093 07/ 05 1032 019 17844 714605513436 31 37 270 231 198 146 108093080060 045 026 2015 12 835700 587494 41650 296 250 212 10 120095081069 051038 021 2012 19828686 570 45 39633] 276 232 194164 116 083070060 20 820 73 54 456 37 312258 21 178 149 104073061 0 037 180 610 478 35 295 233 184 146 116 002 050 038 030 024 016 010 005. 30 742_552 412308 231 174 131 099 075 057033020 015 02 007 004 002 001 1052 (3) Interest Factors for the Present Value of an Annuity of One Dollar Period 2 3 _ _ _ 1 _ 0 0990 0980 0971 092 0 091) 095 0926 097 0909 003 08/ 108g 0847 0833 0806 0 TB1 0 014 190 1942 192 1886 1850 1831 1808 1R3 159 136 1.690 16 1605 1566 1528 1457 192 13 126 2.94] 2.884 2829 2. 75 2723 263 2624 25 2531 2.48] 2.402 7322 2246 2.174 2106 1981 1.868 1.766 1.54 3902 3.808 3717 3630 3546 3465 33873312 3 240 3170 3037 2014 2.98 2690 2.589 2.4CM 2 241 2096 1966 48534713 4 580 4452 439 4212 100 1993 3890 3.79] 3605 3433 3274 3.127 2991 2745 2532 2345 2.181 4 5 6 5.795 5.60] 5.417 5.242 5.076 1917 .766 4623 4.486 4.355 4111 3.889 3.685 3498 3326 3020 259 2534 2399 1 6. 28 6.472 6.230 6.002 5. T86 5.582 5.30 5.206 5.033 4.868 4.554 4288 4,030 3.812 3605 3242 2937 2678 2.455 8 7652 7.325 7.020 6.73] 6.453 5.210 591 5.747 5.535 5.335 4.96B 46104344 4.0TB 3837 3421 3.06 2786 2540 98SE BIZ 45 J1507557150 5 31 1946 40 11 31 356319 1868 103 10 9.47] 8.983 8.530 8.11 7.722 7360 7.024 6.710 6.418 6.145 5.650 5.216 4.833 4.494 4.193 3.682 3.269 2930 2.650 D35% 11 10 368 9787 9253 8.60 8.306 7.8877499 7139 6.805 5.95 5.98 5.453 5.029 4.656 4327 376 3335 2.978 2683 2 11.255 10 55 9954 9.385 8.863 8384 7.9437536 7161 6.814 6.194 5.660 5.197 493 4.439 3.85] 3.3873013 1708 1 21 || 248 10.659986 994 853 8358 7904 1487 7103 6424 5842 5342 4910 4531 39123421 3040 22. 1. 30 12 106 | 296 0563989 995 8.745 8. 24 186 7361 6.62B 6002 5.468 5008 461 39623450 30612 185 8 9 1938 19 03BN 92 9.10B 8.559 8060 7606 6811 6142555 500x466 4001 3483306251 8 1358 56 650830 10 106 1 8851 832724 694 6264.M. 1430 400 31 3088 . 17 15 562 1 292 13.166 12 166 1124 ID 47797ba9122 8544 8002 7120 633 5749 5222.75 4059 3518 3097263 16 16 315 1992 13.75 12 659 11.60 ID 828 10.059 9372 8755 82017150 64675818 5273 48124080 359 330 2767 9 17226 15 678 1 324 13.134 12085 11 158 10 336 960 550 53657366 6550 5875316 4844 4973530 319 2770 18 156 1 02462 10 10.00 1818 9 128 8514 14.6.1500_84MIN LINE- 114. 1 . . . . . . | |||||| 4094 10 || || || 05 18.5 90''..... . 46 10508 22931 0 0.00 19202 15.33 13.70 12 400 || 258 10.214 942) 80 1001 11 55 400 41 3560222