Question
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What is the value of a 10-year, PKR 100,000 par value bond with a 12% annual...
What is the value of a 10-year, PKR 100,000 par value bond with a 12% annual coupon if its required rate of return is 14%?
Solutions
Expert Solution
| value of a 10-year, PKR 100,000 par value bond | 92,333.44 |
| Paticulars | Amount |
| PV of coupon payments = 100,000*12%*5.21612 | 62,593.44 |
| PV of maturity price =100,000*.2974 | 29,740.00 |
| Market value of bond =62,593.44 + 29,740 | 92,333.44 |
| Time | PVF at 14% |
| 1.00 | 0.87719 |
| 2.00 | 0.76947 |
| 3.00 | 0.67497 |
| 4.00 | 0.59208 |
| 5.00 | 0.51937 |
| 6.00 | 0.45559 |
| 7.00 | 0.39964 |
| 8.00 | 0.35056 |
| 9.00 | 0.30751 |
| 10.00 | 0.26974 |
| PVF for 10 Years | 5.21612 |
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