Question

In: Finance

Year Promisedcash flows Expectedcash flows 1 6 5 2 6 5 3 6 5 4 6...

Year

Promisedcash flows

Expectedcash flows

1

6

5

2

6

5

3

6

5

4

6

5

5

6

5

6

6

5

7

6

5

8

6

5

9

6

5

10

106

95

  1. What is the present value today of promised cash flows at 6%?
  2. If the price of the bond is 80, what is the yield to maturity of the bond using the promised cash flows?

  1. What is the present value today of the expected cash flows at 6%?

  1. What would the IRR be if the bond were purchased at 80 and the holder received the expected cash flows?

Solutions

Expert Solution

Calculate the present value as follows:

Formulas:

jeff jeffy answered 6 months ago
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