USING EXCEL. BOND VALUATION 2. JNJ issues some new $1,000 face value subordinated debentures with an annual coupon rate of 4.5%, payable semi-annually. The bonds mature in 20 years. The bond does not contain a call feature. The market interest rate on similar risk and maturity bonds is 4.2%, compounded semi-annually. a) You buy a bond. Find the price you pay. b) Ten years later the market interest rate on 10 year bonds is 5.8%, compounded semi-annually. You sell the bond. What do you receive for it? c) Compute the rate of return you earned over the ten year period if you sell the bond. That is, solve for the IRR of the cash flows you paid out, and received, over the 10 years.

BOND VALUATION 2. JNJ issues some new $1,000 face value subordinated debentures with an annual coupon rate of 4.5%, payable semi-annually. The bonds mature in 20 years. The bond does not contain a call feature. The market interest rate on similar risk and maturity bonds is 4.2%, compounded semi-annually. a) You buy a bond. Find the price you pay. b) Ten years later the market interest rate on 10 year bonds is 5.8%, compounded semi-annually. You sell the bond. What do you receive for it? c) Compute the rate of return you earned over the ten year period if you sell the bond. That is, solve for the IRR of the cash flows you paid out, and received, over the 10 years