Question
In: Finance
Madsen Motors's bonds have 23 years remaining to maturity. Interest is paid annually, they have a...
Madsen Motors's bonds have 23 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 12%, and the yield to maturity is 13%. What is the bond's current market price? Round your answer to the nearest cent.
Solutions
Expert Solution
| Computation Of Bond Price | ||
| a | Annual Coupon Amount | $ 120.00 |
| b | Present Value Annuity Factor for (23 Years,13%) | 7.229658 |
| c | Present Value Of Annual Interest (a*b) | $ 867.56 |
| d | Redemption Value | $ 1,000.00 |
| e | Present Value Of (23 Years,13%) | 0.06014 |
| g | Present Value Of Redemption Amount (d*e) | $ 60.14 |
| f | Bond price(c+g) | $ 927.70 |
Note: Please refer annuity factor tables.
jeff jeffy answered 2 years agoRelated Solutions
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Madsen Motors's bonds have 21 years remaining to maturity. Interest is paid annually, they have a...
Madsen Motors's bonds have 21 years remaining to maturity.
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bond's current market price? Round your answer to the nearest
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bond's current market price? Round your answer to the nearest
cent.
Madsen Motors's bonds have 20 years remaining to maturity. Interest is paid annually, they have a...
Madsen Motors's bonds have 20 years remaining to maturity.
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Madsen Motors's bonds have 22 years remaining to
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the bond's current market price? Round your answer to the nearest
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