preview

Managerial Finance

Satisfactory Essays

-------------------------------------------------
Chapter 5: Bonds, Bond Valuation, and Interest Rates
(5–1) Bond Valuation with Annual Payments
Jackson Corporation’s bonds have N=12 years remaining to maturity. Interest is paid annually, the bonds have a FV=$1,000 par value, and the coupon interest rate is PMT=8%. The bonds have a yield to maturity of I=9%. What is the current market price of these bonds? $928.39
Calculator solution: Input: N = 12, I = 9, PMT = 80, FV = 1000, Solve for PV = $928.39

(5–2) Yield to Maturity for Annual Payments
Wilson Wonders’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of

Get Access