Question

Complete the below table to calculate the price of a $1 million bond issue under each of the following independent assumptions (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.):

1. Maturity 10 years, interest paid annually, stated rate 10%, effective (market) rate 12%

2. Maturity 10 years, interest paid semiannually, stated rate 10%, effective (market) rate 12%

3. Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%

4. Maturity 20 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%

5. Maturity 20 years, interest paid semiannually, stated rate 12%, effective (market) rate 12%

Required 1,

Maturity 10 years, interest paid annually, stated rate 10%, effective (market) rate 12%. (Round your answers to the nearest whole dollar.)

	Table values are based on: n = i = Cash Flow Amount Present Value Interest Principal $ Price of bonds

Required 2

Maturity 10 years, interest paid semiannually, stated rate 10%, effective (market) rate 12%. (Round your answers to the nearest whole dollar.)

	Table values are based on: n = i = Cash Flow Amount Present Value Interest Principal Price of bonds

Required 3

Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%. (Round your answers to the nearest whole dollar.)

	Table values are based on: n = i = Cash Flow Amount Present Value Interest Principal Price of bonds

Required 4

Maturity 20 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%. (Round your answers to the nearest whole dollar.)

	Table values are based on: n = i = Cash Flow Amount Present Value Interest Principal Price of bonds

Required 5

Maturity 20 years, interest paid semiannually, stated rate 12%, effective (market) rate 12%. (Round your answers to the nearest whole dollar.)

	Table values are based on: n = i = Cash Flow Amount Present Value Interest Principal Price of bonds

Answer 1

1. Maturity 10 years, interest paid annually, stated rate 10%, effective (market) rate 12%

Table values are based on:
n	10 Years
i	12%
Cash Flow	Amount	Present Value
Interest	100,000	5,65,023
Principal	10,00,000	3,21,973
Price of Bonds		8,86,996

2. Maturity 10 years, interest paid semiannually, stated rate 10%, effective (market) rate 12%

Table values are based on:
n	20 Years
i	6%
Cash Flow	Amount	Present Value
Interest	50,000	5,73,496
Principal	10,00,000	3,11,805
Price of Bonds		8,85,301

3. Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%

Table values are based on:
n	20 Years
i	5%
Cash Flow	Amount	Present Value
Interest	60,000	7,47,733
Principal	10,00,000	3,76,889
Price of Bonds		11,24,622

4. Maturity 20 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%

Table values are based on:
n	40 Years
i	5%
Cash Flow	Amount	Present Value
Interest	60,000	10,29,545
Principal	10,00,000	1,42,046
Price of Bonds		11,71,591

5. Maturity 20 years, interest paid semiannually, stated rate 12%, effective (market) rate 12%

Table values are based on:
n	40 Years
i	6%
Cash Flow	Amount	Present Value
Interest	60,000	9,02,778
Principal	10,00,000	97,222
Price of Bonds		10,00,000