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In: Finance

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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