In: Finance
Par Value |
Coupon Rate | Years to Maturity | Yield to Maturity | Price |
$5,000.00 | 6% | 5 | 12% | ? |
$5,000.00 | 11% | 15 | 8% | ? |
$1,000.00 | 10% | 10 | 6% | ? |
$1,000.00 | 8% | 5 | 5% | ? |
Find the price for the bond in the following table: (Round to the nearest cent.)
Case A:
Face Value = $5,000
Annual Coupon Rate = 6%
Annual Coupon = 6% * $5,000
Annual Coupon = $300
Time to Maturity = 5 years
Annual YTM = 12%
Price of Bond = $300 * PVIFA(12%, 5) + $5,000 * PVIF(12%,
5)
Price of Bond = $300 * (1 - (1/1.12)^5) / 0.12 + $5,000 /
1.12^5
Price of Bond = $3,918.57
Case B:
Face Value = $5,000
Annual Coupon Rate = 11%
Annual Coupon = 11% * $5,000
Annual Coupon = $550
Time to Maturity = 15 years
Annual YTM = 8%
Price of Bond = $550 * PVIFA(8%, 15) + $5,000 * PVIF(8%,
15)
Price of Bond = $550 * (1 - (1/1.08)^15) / 0.08 + $5,000 /
1.08^15
Price of Bond = $6,283.92
Case C:
Face Value = $1,000
Annual Coupon Rate = 10%
Annual Coupon = 10% * $1,000
Annual Coupon = $100
Time to Maturity = 10 years
Annual YTM = 6%
Price of Bond = $100 * PVIFA(6%, 10) + $1,000 * PVIF(6%,
10)
Price of Bond = $100 * (1 - (1/1.06)^10) / 0.06 + $1,000 /
1.06^10
Price of Bond = $1,294.40
Case D:
Face Value = $1,000
Annual Coupon Rate = 8%
Annual Coupon = 8% * $1,000
Annual Coupon = $80
Time to Maturity = 5 years
Annual YTM = 5%
Price of Bond = $80 * PVIFA(5%, 5) + $1,000 * PVIF(5%, 5)
Price of Bond = $80 * (1 - (1/1.05)^5) / 0.05 + $1,000 /
1.05^5
Price of Bond = $1,129.88