Question

Assume a par value of $1,000. Caspian Sea plans to issue a 10.00 year, annual pay bond that has a coupon rate of 8.12%. If the yield to maturity for the bond is 7.58%, what will the price of the bond be?

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#3

Assume a par value of $1,000. Caspian Sea plans to issue a 12.00 year, annual pay bond that has a coupon rate of 7.96%. If the yield to maturity for the bond is 8.48%, what will the price of the bond be?

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#4

What is the value today of a money machine that will pay $2,452.00 per year for 15.00 years? Assume the first payment is made 2.00 years from today and the interest rate is 6.00%.

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Answer 1

1.

PRICE OF BOND = $1,036.93

	CAPSIAN SEA BOND
COUPON	8.12%
FV	1000
YTM	7.58%
MATURITY	10
PV OF BOND	1,036.93	=PV(YTM,MATURITY,COUPON,FACE VALUE)

2.

PRICE OF BOND = $961.77

	CAPSIAN SEA BOND
COUPON	7.96%
FV	1000
YTM	8.48%
MATURITY	12
PV OF BOND	-961.77	=PV(YTM,MATURITY,COUPON,FACE VALUE)

3.

VALUE OF MACHINE -19,318.96

	AMOUNT
PMT	2452
NPER	15
RATE	6%
PV	₹ 23,814.43	=PV(RATE,NPER,PMT,0)
PRESENT VALUE OF FIRST TWO PAYMENTS
PMT	2452
NPER	2
RATE	6%
PV	₹ 4,495.48	=PV(RATE,NPER,PMT,0)
NET PRESENT VALUE	=23814.43 - 4495.48
	19318.9557