Question
In: Accounting
Nesmith Corporation's outstanding bonds have a $1,000 par value, a 12% semiannual coupon, 17 years to...
Nesmith Corporation's outstanding bonds have a $1,000 par value, a 12% semiannual coupon, 17 years to maturity, and an 9% YTM. What is the bond's price? Round your answer to the nearest cent.
Solutions
Expert Solution
| Price of bond is the present value of cash flows from bond. | |||||||||
| Present value of coupon interest | $ 1,034.81 | ||||||||
| Present value of Par Value | $ 223.90 | ||||||||
| Present value of cash flows from bond | $ 1,258.70 | ||||||||
| Thus, | |||||||||
| Current Price of bond | $ 1,258.70 | ||||||||
| Working: | |||||||||
| # 1 | |||||||||
| Semi annual coupon interest | = | Par Value x Semi annual coupon rate | |||||||
| = | $ 1,000 | x | 6.0% | ||||||
| = | $ 60 | ||||||||
| # 2 | |||||||||
| Present value of annuity of 1 | = | (1-(1+i)^-n)/i | Where, | ||||||
| = | (1-(1+0.045)^-34)/0.045 | i | 4.50% | ||||||
| = | 17.2468 | n | 34 | ||||||
| # 3 | |||||||||
| Present value of 1 | = | (1+i)^-n | |||||||
| = | (1+0.045)^-34 | ||||||||
| = | 0.2239 | ||||||||
| # 4 | |||||||||
| Present value of coupon interest | $ 60 | x | 17.24676 | = | $ 1,034.81 | ||||
| Present Value of Par Value | $ 1,000 | x | 0.22390 | = | $ 223.90 | ||||
ekkarill92 answered 1 year agoRelated Solutions
Nesmith Corporation's outstanding bonds have a $1,000 par value, a 12% semiannual coupon, 16 years to...
Nesmith Corporation's outstanding bonds have a $1,000 par value,
a 12% semiannual coupon, 16 years to maturity, and a 16% YTM. What
is the bond's price? Round your answer to the nearest cent.
$ =
Nesmith Corporation's outstanding bonds have a $1,000 par value, a 8% semiannual coupon, 8 years to...
Nesmith Corporation's outstanding bonds have a $1,000 par value,
a 8% semiannual coupon, 8 years to maturity, and an 10% YTM. What
is the bond's price? Round your answer to the nearest cent.
Nesmith Corporation's outstanding bonds have a $1,000 par value, an 8% semiannual coupon, 18 years to...
Nesmith Corporation's outstanding bonds have a $1,000 par value,
an 8% semiannual coupon, 18 years to maturity, and a 10% YTM. What
is the bond's price? Round your answer to the nearest cent.
Nesmith Corporation's outstanding bonds have a $1,000 par value, a 7% semiannual coupon, 20 years to...
Nesmith Corporation's outstanding bonds have a $1,000 par value,
a 7% semiannual coupon, 20 years to maturity, and an 11% YTM. What
is the bond's price? Round your answer to the nearest cent.
Nesmith Corporation's outstanding bonds have a $1,000 par value, an 11% semiannual coupon, 20 years to...
Nesmith Corporation's outstanding bonds have a $1,000 par value,
an 11% semiannual coupon, 20 years to maturity, and a 15% YTM. What
is the bond's price? Round your answer to the nearest cent.
Nesmith Corporation's outstanding bonds have a $1,000 par value, an 8% semiannual coupon, 15 years to...
Nesmith Corporation's outstanding bonds have a $1,000 par value,
an 8% semiannual coupon, 15 years to maturity, and a 12% YTM. What
is the bond's price? Round your answer to the nearest cent.
Nesmith Corporation's outstanding bonds have a $1,000 par value, a 7% semiannual coupon, 11 years to...
Nesmith Corporation's outstanding bonds have a $1,000 par value,
a 7% semiannual coupon, 11 years to maturity, and an 11% YTM. What
is the bond's price? Round your answer to the nearest cent.
Bond valuation Nesmith Corporation's outstanding bonds have a $1,000 par value, a 8% semiannual coupon, 7...
Bond valuation Nesmith Corporation's outstanding bonds have a
$1,000 par value, a 8% semiannual coupon, 7 years to maturity, and
an 9% YTM. What is the bond's price? Round your answer to the
nearest cent. $ ______________
Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years,...
Lourdes Corporation's 13% coupon rate, semiannual payment,
$1,000 par value bonds, which mature in 15 years, are callable 5
years from today at $1,025. They sell at a price of $1,284.95, and
the yield curve is flat. Assume that interest rates are expected to
remain at their current level.
What is the best estimate of these bonds' remaining life?
It is now January 1, 2019, and you are considering the purchase
of an outstanding bond that was issued on January...
Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 15 years,...
Lourdes Corporation's 13% coupon rate, semiannual payment,
$1,000 par value bonds, which mature in 15 years, are callable 3
years from today at $1,050. They sell at a price of $1,218.85, and
the yield curve is flat. Assume that interest rates are expected to
remain at their current level. What is the best estimate of these
bonds' remaining life? Round your answer to two decimal places.
7.57 years If Lourdes plans to raise additional capital and wants
to use debt...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Reply to this post in at least 500 word. Discuss what you agreed and disagree with...
- Bellevue Inc.’s shareholders’ equity accounts were as follows at the beginning of the current fiscal year,...
- Kingbird Company uses special strapping equipment in its packaging business. The equipment was purchased in January...
- The accompanying data table lists the magnitudes of 50 earthquakes measured on the Richter scale. Test...
- What is the pH of the buffer that results when 0.235 mol of NH3 and (2.46x10^-1)...
- Develop a WBS for aporject of support and rehabilitation of orphans with disabilities use the outline...
- Write a program using C++ that ask the user for the flowing: How many shares to...
ADVERTISEMENT