In: Finance

The 12-year, $1,000 par value bonds of Waco Industries pay 12 percent interest annually. The market price of the bond is $1,135, and the market's required yield to maturity on a comparable-risk bond is 9 percent. Compute the bond's yield to maturity.

1. Determine the value of the bond to you given the market's required yield to maturity on a comparable-risk bond.

Face Value of Bond = $1000

Annual Coupon Payment = $1000*12% = $120

No of years to maturity = 12 years

a). Current Market Price of Bond = $1135

Calculating the Yield to Maturity of Bond using Excel "RATE" Function:-

So,**the Yield to Maturity(YTM) of Bond is
10.02%**

b). Market Yield to Maturity on comparable bond is 9%

Calculating the Price of Bond using excel "PV" function:-

So, **Price of Bond based on Market Yield to Maturity on
comparable bond is $1,214.82**

The 12-year, $1,000 par value bonds of Waco Industries pay 12
percent interest annually. The market price of the bond is $955,
and the market's required yield to maturity on a comparable-risk
bond is 14 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?
Round to nearest two decimal places:

The 16-year, $1,000 par value bonds of Waco Industries pay 11
percent interest annually. The market price of the bond is $945,
and the market's required yield to maturity on a comparable-risk
bond is 10 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?

The 11-year, $1,000 par value bonds of Waco Industries pay 9
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 6 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?

The 18-year, $1,000 par value bonds of Waco Industries pay 7
percent interest annually. The market price of the bond is $925,
and the market's required yield to maturity on a comparable-risk
bond is 9 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?

The 12-year, $1,000 par value bonds of Smith Industries pay 7
percent interest annually. The market price of the bond is $885,
and the market’s required yield to maturity on a comparable-risk
bond is 10 percent.
What is your yield to maturity on the Smith bonds given the
current market price of the bonds? Round to two decimal
places.
What should be the value of the Smith bonds given the market's
required yield to maturity on acomparable-risk bond? Round to...

The 19-year, $1000 par value bonds of Waco Industries pay 8
percent interest annually. The market price of the bond is $1105,
and the market's required yield to maturity on a comparable-risk
bond is 5 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 the Waco bonds given the
current market...

(Bond valuation relationships)The 14-year,
$1,000 par value bonds of Waco Industries pay 11 percent interest
annually. The market price of the bond is $1,115, 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?
1) What is your yield to maturity on
the...

The 17 year, $1000 par
value bonds of Waco Industries pay 6 percent interest annually. The
market price of the bond is $945, and the market's required yield
to maturity on a comparable-risk bond is 5 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?

The 11-year, $1,000 par value bonds of Witt Industries pay 7
percent interest annually. The market price of the bond is $865,
and the market’s required yield to maturity on a comparable-risk
bond is 10 percent. A. What is your yield to maturity on the Witt
bonds given the current market price of the bonds? _% Please round
to two decimal places. B. What should be the value of the Witt
bonds given the market's required yield to maturity on...

Fingen's 12-year, $1,000 par value bonds pay 15 percent
interest annually. The market price of the bonds is $880 and the
market's required yield to maturity on a comparable-risk bond is
16 percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you, given your required
rate of return.
c. Should you purchase the bond?

ADVERTISEMENT

ADVERTISEMENT

Latest Questions

- Write a program to do the following. • Input an integer n. • Create a BST...
- Summarize the basic process for valuing assets
- Why business owners should know about finance?
- The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information...
- Dr. North, a surgeon practicing in Georgia, engaged an Arizona professional corporation consisting of twenty lawyers...
- Project management Expediting a Project Task Predecessor Normal Time Weeks Normal Cost Crash Time Crash Cost...
- Roger issued 40 year bonds six years ago at a coupon rate of 4.50 percent, and...

ADVERTISEMENT