 | |
| Browse | Ask | Answer | Search | Join/Login | |
Hope somebody can figure this out
Asked Jun 3, 2006, 02:12 PM
—
1 Answer  Zoro Sword company bonds pay an annual coupon of 9 1/2 %. They have 8 years to maturity and face value, or par, of $1000. Compute the present value of Zoro bonds if investors required rate of return is 10%. A) $950.00 B) $973.33 C) $ 1027.17 D) $1516.18 Please help me if you can, and if possible , expain the equation used. |
| ||||
| Answer: b) $973.33 Bond Price = C / (1+i) + C / (1+i)^2 + ....... + C / (1+i)^n + M / (1+i)^n C = coupon payment N = number of payments I = interest rate, or required yield M = value at maturity, or par value Coupon = .095 x 1,000 = $95 Maturity of the bond = 8 years Interest = 10% Principle = 1,000 Bond Price = 95/1.1 + 95/1.1^2 + 95/1.1^3 + 95/1.1^4 + 95/1.1^5 + 95/1.1^6 + 95/1.1^7 + 95/1.1^8 + 1,000/1.1^8 Bond Price = 973.33 | ||||
| |
| Thread Tools | Search this Thread |
Add your answer here.
Check out some similar questions!
My boyfriend of 1.5 years just told me he is deciding whether or not to dump me. We are graduating college this year and were planning on going to grad school next year and live together, etc. I'm in so much pain, this decision is taking weeks and it is draining me of everything- I can't eat...
I download a avi movie the I play it using Divx. But in the middle of the story seems the words of the characters don't much to the output words... And I was shock when the audio reach the end while the movie is not done yet... Is there any body knows how can I edit the audio and much it to the...
Hi. For the last few months I have been experiencing that my dreams are coming true. I had a dream few days back that a terrible storm will hit us and it did hit us after few days. And many more dreams have come true. Now, I am having a dream that the world of civilisation is coming to an end....
The term nice guys finish last would fit me perfectly.. Every time I try getting close to someone, rather it be a friend or a girlfriend, it always seems to end in heartbreak or some kind of betrayal. I've become really down about everything, quit my job and now living on what few dollars I have...
View more Finance & Accounting questions Search
