Assume you would like to estimate ABC Company's debt cost. ABC's bond has a semi-annual 5.25 % coupon rate and a Par value of $1,000, with a market price of 86 percent of the Par. Assume a number of years to maturity of 12 years. Estimate the cost of debt for ABC Company. Assume the same number of years to maturity of Question 1. You buy a zero-coupon to reach your goal of having $1,000,000.00 when the zero-Coupon bond matures. The yield of this Zero-Coupon bond is 6.25% compounded semiannually, how much must you invest today to achieve your goal? The face value of each zero-coupon bond is $10,000.
Assume you would like to estimate ABC Company's debt cost. ABC's bond has a semi-annual 5.25 % coupon rate and a Par value of $1,000, with a market price of 86 percent of the Par. Assume a number of years to maturity of 12 years. Estimate the cost of debt for ABC Company. Assume the same number of years to maturity of Question 1. You buy a zero-coupon to reach your goal of having $1,000,000.00 when the zero-Coupon bond matures. The yield of this Zero-Coupon bond is 6.25% compounded semiannually, how much must you invest today to achieve your goal? The face value of each zero-coupon bond is $10,000.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Assume you would like to estimate ABC Company's debt cost. ABC's bond has a semi-annual 5.25 % coupon rate and a Par value of $1,000, with a market price of 86 percent of the Par. Assume a number of years to maturity of 12 years. Estimate the cost of debt for ABC Company.
Assume the same number of years to maturity of Question 1. You buy a zero-coupon to reach your goal of having $1,000,000.00 when the zero-Coupon bond matures. The yield of this Zero-Coupon bond is 6.25% compounded semiannually, how much must you invest today to achieve your goal? The face value of each zero-coupon bond is $10,000.
IN EXCEL
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