KFA has issued a 100-year coupon bond with par of $1,000, and a 6.50% annual coupon...

KFA has issued a 100-year coupon bond with par of $1,000, and a 6.50% annual coupon paid semi-annually. Calculate its price for each of the following three YTM scenarios: 4.0%, 6.0%, and 8.0%.

Input:		Output:
Par ($)	1,000.00
Years to maturity	100
Annual coupon rate	6.50%
Coupons per year	2	Price
Yield to maturity	4.0%
Yield to maturity	6.0%
Yield to maturity	8.0%

KFA is evaluating a project with the following cash flows in the first 4 years: $4,000, $5,000, $6,000, and $7,000. Use an 8.0% discount rate to calculate the project's net present values (NPV) for three potential initial investments: $11,000 (scenario 1), $13,000 (scenario 2), and $15,000 (scenario 3). Assume no residual value.

Input:		Output:	Scenario
Cash Inflows:			1	2	3
Year 1	4,000.00	Start
Year 2	5,000.00	Year 1
Year 3	6,000.00	Year 2
Year 4	7,000.00	Year 3
Discount rate	8.0%	Year 4
Initial cost:
Scenario 1	11,000.00	NPV
Scenario 2	13,000.00
Scenario 3	15,000.00

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jeff jeffy answered 1 month ago

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