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1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8264 0.8116 0.7831 0.7972 0.7118 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.6931 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0,6806 0.6499 0.6209 0.5935 0.5674 0.5428 0.5066 0.4803 0.4251 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0,6302 0.5963 0.5645 0.5346 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.4523 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 0.4039 0.3762 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0.5439 0.7441 0.6756 0.6139 0.5083 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.9053 0.8203 0.5584 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 0.2875 0,2607 0.2567 O 2207

1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8264 0.8116 0.7831 0.7972 0.7118 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.6931 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0,6806 0.6499 0.6209 0.5935 0.5674 0.5428 0.5066 0.4803 0.4251 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0,6302 0.5963 0.5645 0.5346 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.4523 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 0.4039 0.3762 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0.5439 0.7441 0.6756 0.6139 0.5083 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.9053 0.8203 0.5584 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 0.2875 0,2607 0.2567 O 2207

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 9P: Bond Valuation and Interest Rate Risk The Garraty Company has two bond issues outstanding. Both...
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Whats the present value of these three options? I attached an image of a present value chart. Thanks for your help!
Present Value Tables Formula: PV = 1/(1+ n/i 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8696 0.7831 0.6931 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972 0.7695 0.7561 3 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.7118 0.6750 0.6575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 4 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674 0,5428 0.5194 0.4972 0.4803 0.4251 0.4556 0.3996 0.3506 6 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5346 0,5066 0.4323 7. 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.4523 0.3759 0.5403 0.4039 0.3762 0.3269 8. 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5019 0.4665 0.4339 0.7664 0.7026 0.6446 0.5919 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0,3075 0.2843 9. 0.9143 0.8368 0.5439 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2472 10 0.9053 0.2149 0.1869 0.8963 0.8043 0.7224 0.6496 0.5847 0.4751 0.4289 0.3875 0.3505 0.3173 0.2875 0.2607 0.2366 11 0.5268 0.7014 0.5568 0.4970 0.3971 0.3555 0.3186 0.2858 0.2567 0.2307 0.2076 12 0.8874 0.7885 0.6246 0.4440 0.6006 0.5303 0.4688 0.3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1625 13 0.8787 0.7730 0.6810 0.4150 0.5775 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 0.2046 0.1807 0.1597 0.1413 14 0.8700 0.7579 0.6611 0.5051 0.4810 0.4173 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1229 15 0.8613 0.7430 0.6419 0.5553 0.3624 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1883 0.1631 0.1415 0.1229 0.1069 16 0.8528 0.7284 0.6232 0.5339 0.1978 0.1696 0.1456 0.1252 0.1078 0.0929 0.2311 0.2120 17 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.1799 0.1528 0.1300 0.1108 0.0946 0.0808 18 0.8360 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1377 0.1161 0.0981 0.0829 0.0703 19 0.8277 0.6864 0.0728 0.0611 0.2145 0.1987 20 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.1784 0.1486 0.1240 0.1037 0.0868 0.0638 0.0560 0.1117 0.0768 0.0531 0.1637 0.1502 0.8114 0.6598 0.4388 0.3589 0,2942 0.2415 0.1351 0.0926 21 0.5375 0.1839 0.1228 0.1007 0.0826 0.0680 0.0462 22 0.8034 0.6468 0.5219 0.4220 0.3418 0.2775 0.2257 0.0601 0.0402 0.0491 0.0431 0.0378 0.0331 23 0.7954 0.5067 0.4057 0.3256 0.2618 0.2109 0.1703 0.1378 0.1117 0.0907 0.0738 0.6342 0.4919 0.2470 0.1971 0.1577 0.1264 0.1015 0.0817 0.0659 0.0532 0.0349 24 0.7876 0.6217 0.3901 0.3101 0.0736 0.0663 0.0597 0.7798 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0471 0.0304 25 0.6095 0.4776 0.0417 0.0264 0.1064 0.0976 0.2812 0.2198 0.1722 0.1352 0.0839 0.0525 0.5976 0.5859 26 0.7720 0.4637 0.3607 0.0369 0.0326 0.0289 0.4502 0,3468 0.2678 0.2074 0.1609 0.1252 0.0763 0.0469 0.0291 0.0230 27 0.7644 0.0255 0.0200 0.0693 0.0630 0.0573 0.3335 0.1956 0.1504 0.1159 0.0895 0.0538 0.0419 28 0.7568 0.5744 0.4371 0.2551 0.0485 0.0374 0.0224 0.0174 0.1073 0.0994 0.0754 0.2429 0.0822 0.1846 0.1741 29 0.7493 0.5631 0.4243 0.3207 0.1406 0.0437 0.0334 0.0256 0.0196 0.0151 30 0.7419 0.5521 0.4120 0.3083 0.2314 0.1314
Transcribed Image Text:Present Value Tables Formula: PV = 1/(1+ n/i 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8696 0.7831 0.6931 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972 0.7695 0.7561 3 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.7118 0.6750 0.6575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 4 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674 0,5428 0.5194 0.4972 0.4803 0.4251 0.4556 0.3996 0.3506 6 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5346 0,5066 0.4323 7. 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.4523 0.3759 0.5403 0.4039 0.3762 0.3269 8. 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5019 0.4665 0.4339 0.7664 0.7026 0.6446 0.5919 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0,3075 0.2843 9. 0.9143 0.8368 0.5439 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2472 10 0.9053 0.2149 0.1869 0.8963 0.8043 0.7224 0.6496 0.5847 0.4751 0.4289 0.3875 0.3505 0.3173 0.2875 0.2607 0.2366 11 0.5268 0.7014 0.5568 0.4970 0.3971 0.3555 0.3186 0.2858 0.2567 0.2307 0.2076 12 0.8874 0.7885 0.6246 0.4440 0.6006 0.5303 0.4688 0.3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1625 13 0.8787 0.7730 0.6810 0.4150 0.5775 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 0.2046 0.1807 0.1597 0.1413 14 0.8700 0.7579 0.6611 0.5051 0.4810 0.4173 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1229 15 0.8613 0.7430 0.6419 0.5553 0.3624 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1883 0.1631 0.1415 0.1229 0.1069 16 0.8528 0.7284 0.6232 0.5339 0.1978 0.1696 0.1456 0.1252 0.1078 0.0929 0.2311 0.2120 17 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.1799 0.1528 0.1300 0.1108 0.0946 0.0808 18 0.8360 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1377 0.1161 0.0981 0.0829 0.0703 19 0.8277 0.6864 0.0728 0.0611 0.2145 0.1987 20 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.1784 0.1486 0.1240 0.1037 0.0868 0.0638 0.0560 0.1117 0.0768 0.0531 0.1637 0.1502 0.8114 0.6598 0.4388 0.3589 0,2942 0.2415 0.1351 0.0926 21 0.5375 0.1839 0.1228 0.1007 0.0826 0.0680 0.0462 22 0.8034 0.6468 0.5219 0.4220 0.3418 0.2775 0.2257 0.0601 0.0402 0.0491 0.0431 0.0378 0.0331 23 0.7954 0.5067 0.4057 0.3256 0.2618 0.2109 0.1703 0.1378 0.1117 0.0907 0.0738 0.6342 0.4919 0.2470 0.1971 0.1577 0.1264 0.1015 0.0817 0.0659 0.0532 0.0349 24 0.7876 0.6217 0.3901 0.3101 0.0736 0.0663 0.0597 0.7798 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0471 0.0304 25 0.6095 0.4776 0.0417 0.0264 0.1064 0.0976 0.2812 0.2198 0.1722 0.1352 0.0839 0.0525 0.5976 0.5859 26 0.7720 0.4637 0.3607 0.0369 0.0326 0.0289 0.4502 0,3468 0.2678 0.2074 0.1609 0.1252 0.0763 0.0469 0.0291 0.0230 27 0.7644 0.0255 0.0200 0.0693 0.0630 0.0573 0.3335 0.1956 0.1504 0.1159 0.0895 0.0538 0.0419 28 0.7568 0.5744 0.4371 0.2551 0.0485 0.0374 0.0224 0.0174 0.1073 0.0994 0.0754 0.2429 0.0822 0.1846 0.1741 29 0.7493 0.5631 0.4243 0.3207 0.1406 0.0437 0.0334 0.0256 0.0196 0.0151 30 0.7419 0.5521 0.4120 0.3083 0.2314 0.1314
Option Information Present Value Formula PV Answer Calculate the present value of investing in a start-up company if you expect to receive $5.000 in 4 years and the annual market rate is 6%. Remember to use the Present Value factor in your calculation. Example $5,000 X.79209 $3,960.45 Pay $4,500 for a bond. The bond pays $5,000 at the end of 2 years with a 10% coupon (irnterest) paid semi-annually #1 (every 6 months). What is the present value of the bond? Is this a good deal since you are paying $4.500? Pay off a loan. The loan is due at the end of 2 years (balloon loan). It has a balance of $5.500 and an interest rate of # 2 12% that accrues semi-annually. The bank said they will take the present value of the loan. Do you have enough money to pay off the loan? Lend money to your family for a home renovation. They will pay you $5.000 at the end of the 2 years. Is this a good #3 deal if the annual market rate is 6%?
Transcribed Image Text:Option Information Present Value Formula PV Answer Calculate the present value of investing in a start-up company if you expect to receive $5.000 in 4 years and the annual market rate is 6%. Remember to use the Present Value factor in your calculation. Example $5,000 X.79209 $3,960.45 Pay $4,500 for a bond. The bond pays $5,000 at the end of 2 years with a 10% coupon (irnterest) paid semi-annually #1 (every 6 months). What is the present value of the bond? Is this a good deal since you are paying $4.500? Pay off a loan. The loan is due at the end of 2 years (balloon loan). It has a balance of $5.500 and an interest rate of # 2 12% that accrues semi-annually. The bank said they will take the present value of the loan. Do you have enough money to pay off the loan? Lend money to your family for a home renovation. They will pay you $5.000 at the end of the 2 years. Is this a good #3 deal if the annual market rate is 6%?
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