Question
In: Finance
Moerdyk Corporation's bonds have a 15-year maturity, a 5.25% coupon rate with interest paid semiannually, and...
Moerdyk Corporation's bonds have a 15-year maturity, a 5.25% coupon rate with interest paid semiannually, and a par value of $1,000. The nominal required rate of return on these bonds is 6.50%. What is the bond’s intrinsic value? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.
Solutions
Expert Solution
Value of Bond = PV of CFs from it.
| Period | CF | PVF @3.25% | Disc CF | 2.875 |
| 1 | $ 26.25 | 0.9685 | $ 25.42 | 88.34286 |
| 2 | $ 26.25 | 0.9380 | $ 24.62 | |
| 3 | $ 26.25 | 0.9085 | $ 23.85 | |
| 4 | $ 26.25 | 0.8799 | $ 23.10 | |
| 5 | $ 26.25 | 0.8522 | $ 22.37 | |
| 6 | $ 26.25 | 0.8254 | $ 21.67 | |
| 7 | $ 26.25 | 0.7994 | $ 20.98 | |
| 8 | $ 26.25 | 0.7742 | $ 20.32 | |
| 9 | $ 26.25 | 0.7499 | $ 19.68 | |
| 10 | $ 26.25 | 0.7263 | $ 19.06 | |
| 11 | $ 26.25 | 0.7034 | $ 18.46 | |
| 12 | $ 26.25 | 0.6813 | $ 17.88 | |
| 13 | $ 26.25 | 0.6598 | $ 17.32 | |
| 14 | $ 26.25 | 0.6391 | $ 16.78 | |
| 15 | $ 26.25 | 0.6189 | $ 16.25 | |
| 16 | $ 26.25 | 0.5995 | $ 15.74 | |
| 17 | $ 26.25 | 0.5806 | $ 15.24 | |
| 18 | $ 26.25 | 0.5623 | $ 14.76 | |
| 19 | $ 26.25 | 0.5446 | $ 14.30 | |
| 20 | $ 26.25 | 0.5275 | $ 13.85 | |
| 21 | $ 26.25 | 0.5109 | $ 13.41 | |
| 22 | $ 26.25 | 0.4948 | $ 12.99 | |
| 23 | $ 26.25 | 0.4792 | $ 12.58 | |
| 24 | $ 26.25 | 0.4641 | $ 12.18 | |
| 25 | $ 26.25 | 0.4495 | $ 11.80 | |
| 26 | $ 26.25 | 0.4354 | $ 11.43 | |
| 27 | $ 26.25 | 0.4217 | $ 11.07 | |
| 28 | $ 26.25 | 0.4084 | $ 10.72 | |
| 29 | $ 26.25 | 0.3955 | $ 10.38 | |
| 30 | $ 26.25 | 0.3831 | $ 10.06 | |
| 30 | $ 1,000.00 | 0.3831 | $ 383.09 | |
| Price of Bond | $ 881.36 | |||
Value of Bond is 881.36
jeff jeffy answered 9 months agoRelated Solutions
Moerdyk Corporation's bonds have a 15-year maturity, a 5.25% coupon rate with interest paid semiannually, and...
Moerdyk Corporation's bonds have a 15-year maturity, a 5.25%
coupon rate with interest paid semiannually, and a par value of
$1,000. The nominal required rate of return on these bonds is
7.25%. What is the bond’s intrinsic value? Enter your answer
rounded to two decimal places. Do not enter $ or comma in the
answer box. For example, if your answer is $12,300.456 then enter
as 12300.46 in the answer box.
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