If there a two bonds issued and each pay $100.annual interest plus $1000. at maturity, Bond L has maturity of 15yrs.; Bond S maturity of 1 yr., what will be the value of each bond when the interest rate is 5%, 8% and12%? Assuming only one payment left to be made.

  1. 👍
  2. 👎
  3. 👁
  1. Bond value and time—Constant required returns Pecos Manufacturing has just
    issued a 15-year, 12% coupon interest rate, $1,000-par bond that pays interest
    annually. The required return is currently 14%, and the company is certain it will
    remain at 14% until the bond matures in 15 years.
    a. Assuming that the required return does remain at 14% until maturity, find the
    value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years,
    (5) 3 years, and (6) 1 year to maturity.

    1. 👍
    2. 👎

Respond to this Question

First Name

Your Response

Similar Questions


    Yield to call Six years ago, the Singleton Company issued 20-year bonds with a 14 percent annual coupon rate at their $1,000 par value. The bonds had a 9 percent call premium, with 5 years of call protection. Today, Singleton

  2. Intermediate Accounting

    The 10% bonds payable of Klein Company had a net carrying amount of $570,000 on December 31, 2006. The bonds, which had a face value of $600,000, were issued at a discount to yield 12%. The amortization of the bond discount was

  3. Math

    The Garraty company has two bond issues outstanding. Both bonds pa $100 annual interest plus $1,000 at maturity. Bond L has a maturity of 15 years and Bond S a maturity of 1 year. A). What will be the value of each of these bonds

  4. Finance

    Wachowicz Corporation issued 15-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they

  1. history

    Heather bought a ten-year maturity corporate bond when it was issued for $1,000. The bond has an annual interest rate of seven percent and pays interest semi-annually. How much does she receive every six months?

  2. Finance

    Grasshopper Inc issued 20 years, noncallable, 7.8% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest on these bonds is 5.5%. What is the current price of the bonds, given that they now have

  3. finance

    1. Yest Corporation's bonds have a 15-year maturity, a 7% semiannual coupon, and a par value of $1,000. The market interest rate (r) is 6%, based on semiannual compounding. What is the bond’s price? 2. A 20-year, $1,000 par

  4. Finance

    Zabberer Corporation bonds pay a coupon rate of interest of 12 percent annually and have a maturity value of $1000. The bonds are scheduled to mature at the end of 14 years. The company has the option to call the bonds in 8 years

  1. Finance

    Six years ago, Bradford Community Hospital issued 20-year municipal bonds with a 7% annual coupon rate. The bonds were called today for a $70 call premium- that is, bondholders received $1,070 for each bond. What is the realized

  2. finance

    swh corporation issued bonds on january 1, 2004. The bonds had a coupon rate of 4.5%, with interest paid semiannually. The face of the bonds is $1000 and the bonds mature on January 1, 2014. What is the instrinsic value (to the

  3. Accounting

    Go to Table 10-1 which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 11 percent to 8 percent: A. What is the bond price at 11%? B. What is the bond

  4. Finance

    A three-year bond has 8.0% coupon rate and face value of $1000. If the yield to maturity on the bond is 10%, calculate the price of the bond assuming that the bond makes semi-annual coupon interest payments.

You can view more similar questions or ask a new question.