Bond Valuation(5-1) Jackson Corporation'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 8%. The bonds have a yield tomaturity of 9%. What is the current market price of these bonds?Answer:n= 12 years, Par Value = $1,000, Coupon Interest Rate = 8%, YTM = 9%Coupon Payment(I)Par Value of Bond x Coupon Interest Rate$1,000 x 8%$80Value of bonds (Vb)= $928.36By using financial calculator:Inputs:N= 12, I/Y = 9%,The current market of these bonds is $928.36(manual calculation) or $928.39 (financialcalculator).PMT = $80, FV = $1,000Output:PV = -$928.39

Par value of bond = $ 1000 Coupon rate = 8% Coupon amount = 1000*0.08 = $ 80 Years to maturity = 12…

(5-1) Jackson Corporation'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 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds?

(5-1) Jackson Corporation'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 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds?

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 10P

See similar textbooks

Related questions

Q: Ninja Co. issued 14-year bonds a year ago at a coupon rate of 6.9 percent. The bonds make semiannual…

A: Current price of the bond is the sum of present value of maturity value of bond value and present…

Q: 6-19 Eight years ago, Over-the-Top Trampolines issued a 15- year bond with a $1,000 par value and a…

Q: Renfro Rentals has issued bonds that have a 7% coupon rate, payable semiannually. The bonds mature…

A: Face value (FV) = $1000 Coupon rate = 7% Semi annual coupon amount (C) = 1000*0.07/2 = $35 Years to…

Q: Jackson Corporation’s bonds have 10 years remaining to maturity. Interest is paid annually, the…

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: Watters Umbrella Corp. issued 15-year bonds 2 years ago at a coupon rate of 8 percent. The bonds…

A: Given, Time=15 years bond coupon rate=8% bond currently selling =115%

Q: MARJ Co. has a bonds outstanding with maturity value of P1,000. The effective interest is determined…

A: The coupon amount can be calculated with the help of PMT function of Excel. The PMT function can be…

Q: ABC Company's bonds mature in 7 years, have a par value of $1,000, and make an annual coupon payment…

A: Par value of bond (FV) = $1000 Annual coupon amount (C) = $70 Years to maturity (n) = 7 Years Market…

Q: Pace University has bonds on the market making annual payments, with eight years to maturity, a par…

A: Calculation of coupon rate on bonds: Answer: Coupon rate is 5.07%

Q: ABC Corporation is issuing Ten-year $1,000 Par Value 12% coupon bonds with interest paid every six…

A: The question is based on the concept valuation of bond with annual coupon payment. Formula as,

Q: at what price should the bonds sell

A: Bond is a type corporate loan issued by companies to finance their operations. The current price of…

Q: ABC Corporation issued P1,000,000 in 8% bonds, maturing in ten years and paying interest…

A: Face Value of bonds = 1,000,000 Coupon rate = 8% N = 20 semi annual periods (10 years) Bonds issued…

Q: Palmer Products has outstanding bonds with an annual 8 percent coupon. The bonds have a par value of…

A: Bonds are the liabilities of the company which is issued to raise the funds required to finance the…

Q: The National Company’s bonds have 10 years remaining to maturity. Interest is paid annually; the…

A: The price of a bond and the YTM: The current market price of a bond is the value of all remaining…

Q: MJI Corporation bonds mature in 6 years and have a yeild to maturity of 8.5 eprcent. The par value…

A: Time period = 6 Years × 2 = 12 semi annual periods YTM = 8.5% ÷ 2 = 4.25% Par Value = 1000 Coupon =…

Q: Renfro Rentals has issued bonds that have a 12% coupon rate, payable semiannually. The bonds mature…

A: Given details are : Face value (FV) of bond = $1000 Coupon rate = 12% per annum Hence, Semi-annual…

Q: Soborox Co. issued 25-year bonds, 17 years ago at a coupon rate of 12 percent. The bonds make…

A: Bonds are debts instruments that are issued by entities to raise funds and meet their capital…

Q: Renfro rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature…

A: In the given question we require to compute the price of the bonds (PV) from below details: Face…

Q: Gabriele Enterprises has bonds on the market making annual payments, with eleven years to maturity,…

A: Coupon rate:The coupon rate is the rate of yield provided by the fixed-income securities and it is…

Q: DrumPic Corporation issued $100 million bonds that mature in 30 years and have a 5% coupon rate that…

A: A bond is a fixed-income security that represents an investor's obligation to a borrower (typically…

Q: A company has issued $75 million (face value) of bonds with three-years to maturity. They offer an…

A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: One year ago Lerner and Luckmann Co. issued 15-year, noncallable, 6.9% annual coupon bonds at their…

A: price of bond formula: price of bond=coupon rate×par×1-11+rnr+par1+rn where, r=yield to maturity…

Q: Severn Company’s bond has four years remaining to maturity. Interest is paid semiannually, the bonds…

A: YTM is return to investors by holding bonds till the maturity. YTM depends upon the current price of…

Q: The Brownstone Corporation’s bonds have 5 years remaining to maturity. Interest is paid annually,…

A: a) YTM if price is 829 N = 5 PMT = 1000*9% = 90 FV =- 829 FV = 1000

Q: One year ago, Berardi corporation issued a series of 13% semiannual coupon callable bonds with par…

A: We will use the RATE function inexcel to calculate the yield. Before we do so, please note the…

Q: Renfro Corporation’s bonds will mature in 10 years. The bonds have a face value of $1,000 and an 8%…

A: BondIt is the instrument of the indebtedness of an issuer of the bond to the holders of the bond

Q: Wilsons company bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have…

A: Nper = Number of years = 12 PMT = Coupon = 1000*10% = 100 PV = present value = -850 FV = Future…

Q: Charlie Corporation is a chemical company. The company issued an outstanding bond with a P100,000…

A: Par value of bond (FV) = P100,000 Coupon rate = 8% Quarterly coupon amount (C) = 100,000*0.08/4 =…

Q: National Co. has outstanding bonds with an annual 8 percent coupon. The bonds have a par value of…

A: Par value = P1000 Coupon rate = 8% Annual coupon amount = 1000*0.08= P80 Years to maturity = 11…

Q: Time Warner has bonds that are selling for $1,371. The coupon interest rate on the bonds is 9.15…

A: Given details are : Face value (Par value) of bond = $1000 Current Selling price of bond = $1371…

Q: 2. ABC Corporation issued P1,000,000 in 8% bonds, maturing in ten years and paying interest…

A: Solution Concept When the coupon rate of bond = market rate of interest , bond is called a par…

Q: Skyscraper Inc. has 12-year bonds outstanding with a face value of $1,000 and a market price of…

A: Calculation of coupon rate:Coupon rate is 3.75%.Excel spread sheet:

Q: A company has issued $75 million (face value) of bonds with three-years to maturity. They offer an…

A: Semiannual coupon rate Semiannual coupon rate is calculated as shown below. Semi-annual…

Q: The Brownstone Corporation’s bonds have 5 years remaining to maturity.Interest is paid annually, the…

Q: Iris Corp issued bonds with a coupon rate of 15%, pay coupons annually, have 6 years remaining to…

A: YEARS 6 COUPON RATE 15% PRESENT VALUE $950 FACE VALUE $1,000 PMT (MONTHLY PAYMENT) $150

Q: Nungesser Corporation has issued bonds that have a 9 percent coupon rate, payable semiannually. The…

A: This question require us to compute the price of the bonds from below given details: Coupon rate =…

Q: Jackson Corporation’s bonds have 10 years remaining to maturity. Interest is paid annually, the…

A: Price of bonds is persent value of all coupons and persent value of face/par value of bond. Formula…

Q: What's the yield to maturity?

A: Number of periods = 10 * 2 = 20 Semi annual coupon = [(8 / 100) * 1000] / 2 = 40 Yield to maturity =…

Q: Let us assume that Hono Company has $1,000 par value bonds outstanding that have a 14 percent stated…

A: Par value (F) = $ 1000 Coupon rate = 14% Coupon amount (C) = 1000*0.14 = $ 140 Years to maturity (N)…

Q: Gabriele Enterprises has bonds on the market making annual payments, with seven years to maturity, a…

A: Coupon rate = coupon amount / Face value

Q: Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature…

A: Bond is a type of debt security which is issued by government or corporates to collect or arrange…

Q: One year ago Lerner and Luckmann Co. issued 15-year, noncallable, 6.1% annual coupon bonds at their…

A: The correct option is as fallows

Q: botanica incorporation has bonds with 14 years to maturity, a face value of $1000, a YTM of 8.2…

A: Given: Number of years to maturity = 14 Face value = $1,000 YTM = 8.2% Present value of bond =…

Q: ABC Retailers just issued 200 16-year bonds with face value of €5,000. The quoted price of those…

A: Face Value = €5,000 Quoted price = 96.268 Time Period = 16 Years Yield to Maturity = 5.27%

Q: Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature…

A: Bond generated by present discounted value of future amount is called Bond price.

Q: Nesmith Corporation’s outstanding bonds have a $1,000 par value, an8% semiannual coupon, 14 years to…

A: Bonds are instruments used by organizations to get debt funds from public. Bonds pay regular coupons…

Q: West Corp. issued 15-year bonds two years ago at a coupon rate of 8.5 percent. The bonds make…

A: Note: Bond pays coupon semiannually NPER = Number of periods = (15-2)*2 = 26 PMT = Coupon =…

Question

Bond Valuation
(5-1) Jackson Corporation'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 8%. The bonds have a yield to
maturity of 9%. What is the current market price of these bonds?
Answer:
n= 12 years, Par Value = $1,000, Coupon Interest Rate = 8%, YTM = 9%
Coupon Payment(I)
Par Value of Bond x Coupon Interest Rate
$1,000 x 8%
$80
Value of bonds (Vb)
= $928.36
By using financial calculator:
Inputs:
N= 12, I/Y = 9%,
The current market of these bonds is $928.36
(manual calculation) or $928.39 (financial
calculator).
PMT = $80, FV = $1,000
Output:
PV = -$928.39

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here