Question

Answer the following questions
Al Safa Inc. plans to issue new bonds to finance its new project. In its efforts to price the issue, Al-Safa has identified a company of similar risk with an outstanding bond issue that has an 8 percent coupon rate having a maturity of ten years. This firm's bonds are currently selling for $1,091.96. If interest is paid annually for both bonds, what must the coupon rate of the new bonds be in order for the issue to sell at par?

Answer 1
Sbitany has an issue of $1,000 par value bonds with a 14 percent annual coupon interest rate. The issue has ten years remaining to the maturity date. Bonds of similar risk are currently selling to yield a 12 percent rate of return. The current value of each Sbitany's bond is

Answer 2
Sbitany has an issue of $1,000 par value bonds with a 14 percent coupon interest rate outstanding. The issue pays interest semiannually and has 10 years remaining to its maturity date. Bonds of similar risk are currently selling to yield a 12 percent rate of return. What is the value of these bonds?

Please Solve As soon as
Solve quickly I get you two UPVOTE directly
Thank's
Abdul-Rahim Taysir

Answer 1

First:

Calculator
Inputs:
PV	(1,091.960)
PMT	80.0
FV	1,000.00
N	10
Output:
I/Y = YTM	6.71%

Coupon rate should be 6.71% to sell at par

Second:

Calculator
Inputs:
FV	1,000.00
PMT	140.00
Rate (I/Y)	12.000%
Term N	10.00
Output:
PV	1,113.00

Bond price is 1113

Third:

Calculator
Inputs:
FV	1,000.00
PMT	70.00
Rate (I/Y)	6.000%
Term N	20.00
Output:
PV	1,114.70

Price is 1,114.70