Question
In: Finance
(Bond valuation) Enterprise, Inc. bonds have an annual couponrate of 11 percent. The interest is...
(Bond valuation)
Enterprise, Inc. bonds have an annual coupon rate of 11 percent. The interest is paid semiannually and the bonds mature in 9 years. Their par value is $1000. If the market's required yield to maturity on a comparable-risk bond is 16 percent, what is the value of the bond? What is its value if the interest is paid annually?
a. The value of the Enterprise bonds if the interest is paid semiannually is $ nothing. (Round to the nearest cent.)
Solutions
Expert Solution
a. Semiannual interest = $1,000 * 0.11 * 6/12 = $55
Current bond price = $55(PVIFA 8%,18) + $1,000(PVIF 8%,18)
Current bond price = ($55 * 9.37188713542) + ($1,000 * 0.25024902906)
Current bond price = $765.70
b. Interest = $1,000 * 0.11 = $110
Current bond price = $110(PVIFA 16%,9) + $1,000(PVIF 16%,9)
Current bond price = ($110 * 4.60654387489) + ($1,000 * 0.26295297998)
Current bond price = $769.67
jeff jeffy answered 2 years agoRelated Solutions
(Bond valuation) Bellingham bonds have an annual coupon rate of 11 percent and a par value...
(Bond valuation) Bellingham bonds have an annual coupon rate
of 11 percent and a par value of $ 1 comma 000 and will mature in
20 years. If you require a return of 12 percent, what price would
you be willing to pay for the bond? What happens if you pay more
for the bond? What happens if you pay less for the bond? a. The
price you would be willing to pay for the bond is -----?
(Bond valuation) The 11?-year ?$1,000 par bonds of Vail Inc. pay 11 percent interest. The? market's...
(Bond valuation) The 11?-year ?$1,000 par bonds of Vail Inc. pay
11 percent interest. The? market's required yield to maturity on a?
comparable-risk bond is 7 percent. The current market price for the
bond is $1,140.
a. Determine the yield to maturity.
b.What is the value of the bonds to you given the yield to
maturity on a? comparable-risk bond?
c.Should you purchase the bond at the current market? price?
a. What is your yield to maturity on the Vail...
Enterprise, Inc. bonds have an annual coupon rate of 14 percent. The interest is paid semiannually...
Enterprise, Inc. bonds have an annual coupon rate of 14 percent.
The interest is paid semiannually and the bonds mature in 14 years.
Their par value is $1,000. If the market's required yield to
maturity on a comparable-risk bond is 9 percent, what is the
value of the bond? What is its value if the interest is paid
annually?
A. The value of the Enterprise bonds if the interest is paid
semiannually is..
Enterprise,Inc. bonds have an annual coupon rate of13 percent. The interest is paid semiannually and the...
Enterprise,Inc. bonds have an annual coupon rate of13 percent.
The interest is paid semiannually and the bonds mature in7years.
Their par value is$1000If the market's required yield to maturity
on a comparable-risk bond is 15percent, what is the value of the
bond? What is its value if the interest is paid annually?a. The
value of the Enterprise bonds if the interest is paid semiannually
is
$?
(Round to the nearest cent.)
(Bond Valuation) Hamilton, Inc. bonds have a coupon rate of 12 percent. The interest is paid...
(Bond Valuation) Hamilton, Inc. bonds have a coupon rate of 12
percent. The interest is paid semiannually, and the bonds mature in
14 years. Their par value is $1,000. If your required rate of
return is 9 percent, what is the value of the bond? What is the
value if the interest is paid annually?
a. If the interest is paid semiannually, the value of the bond
is $_____
Bond valuation) Bellingham bonds have an annual coupon rate of 9 percent and a par value...
Bond valuation) Bellingham bonds have an annual coupon rate of
9 percent and a par value of $1,000 and will mature in 5 years. If
you require a return of 6 percent, what price would you be willing
to pay for the bond? What happens if you pay more for the bond?
What happens if you pay less for the bond?
a. The price you would be willing to pay for the bond
is (Round to the nearest cent.)
b. The...
(Bond valuation) Bellingham bonds have an annual coupon rate of 8 percent and a par value...
(Bond valuation) Bellingham bonds have an annual coupon rate of
8 percent and a par value of $ 1 comma 000 and will mature in 20
years. If you require a return of 15 percent, what price would you
be willing to pay for the bond? What happens if you pay more for
the bond? What happens if you pay less for the bond?
Enterprise, Inc. bonds have an annual coupon rate of 13percent. The interest is paid semiannually and...
Enterprise, Inc. bonds have an annual coupon rate of 13percent.
The interest is paid semiannually and the bonds mature in11
years. Their par value is $1,000. If the market's required
yield to maturity on a comparable-risk bond is 11percent, what is
the value of the bond? What is its value if the interest is paid
annually?
a. The value of the Enterprise bonds if the interest is paid
semiannually is
(Round to the nearest cent.)
Bond valuation relationships) The 17-year, $1000 par value bonds of Waco Industries pay 11 percent interest...
Bond valuation relationships)
The 17-year, $1000 par value bonds of Waco Industries pay 11
percent interest annually. The market price of the bond is
$1,095, and the market's required yield to maturity on a
comparable-risk bond is 8 percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you given the market's
required yield to maturity on a comparable-risk bond.
c. Should you purchase the bond?
a. What is your yield to maturity on...
Bond Valuation with Annual Payments Jackson Corporation's bonds have 5 years remaining to maturity. Interest is...
Bond Valuation with Annual Payments
Jackson Corporation's bonds have 5 years remaining to maturity.
Interest is paid annually, the bonds have a $1,000 par value, and
the coupon interest rate is 11%. The bonds have a yield to maturity
of 10%. What is the current market price of these bonds? Round your
answer to the nearest cent.
Yield to Maturity for Annual Payments
Wilson Wonders' bonds have 15 years remaining to maturity.
Interest is paid annually, the bonds have a...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Consider the following linear programming problem: Maximize 10X + 8Y Subject to: 40X + 24Y <=...
- Gladstone Company tracks the number of units purchased and sold throughout each accounting period but applies...
- Think about a company you have worked for, either currently or in the past. Reflect upon...
- 1) X Bank has $1 million in new funds that must be allocated to mortgage (home)...
- Needs to be done in PYTHON A. Create a Dollar currency class with two integer attributes...
- Cash Budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget...
- Consider the case of Falcon Freight Inc. (FF): Five years of realized returns for FF are...
ADVERTISEMENT