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-   -   Present value/future value and bonds (https://www.askmehelpdesk.com/showthread.php?t=305083)

  • Jan 17, 2009, 09:54 PM
    jam287
    present value/future value and bonds
    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?
  • Jan 17, 2009, 09:57 PM
    jam287

    I see that this is probably in the wrong section and should be in the Homework section so I'll remake the topic there.

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