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View Full Version : Present value/future value and bonds


jam287
Jan 17, 2009, 09:54 PM
I have a few questions and here are the exact wordings of the questions, and could you please show your work to help me learn how this is all done:

1) Johnny pays $100,000 for zero-interest bonds that pay $197,382.27 6 years from today. What is the discount rate associated with the price Johnny paid? (answer in percent)

2) Dan pays $100,000 for an annuity that pays $25,045.65 per year for 5 years starting 1 year from today. What is the discount rate associated with the price Dan paid? (answer in percent)

3)a. Some company issues a 5 year, $10 milllion bond with a 10% stated rate (note: semi-annual interest payments). The marker rate at the time of issuance was 8%. What is the present value of the principal amount?

b. What is the present value of interest payments?

c. What is the market price of the bond?

jam287
Jan 17, 2009, 09:57 PM
I see that this is probably in the wrong section and should be in the Homework section so I'll remake the topic there.