Carrie's Clothes, Inc. has a seven-year bond outstanding that pays $50 annually. The face value of each bond is $1,000, and the bond sells for $890. What is the bond's coupon rate? Round your answer to two decimal places. % What is the current yield? Round your answer to two decimal places. % What is the yield to maturity? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest whole number. %
Carrie's Clothes, Inc. has a seven-year bond outstanding that pays $50 annually. The face value of each bond is $1,000, and the bond sells for $890. What is the bond's coupon rate? Round your answer to two decimal places. % What is the current yield? Round your answer to two decimal places. % What is the yield to maturity? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest whole number. %
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 1MC
Related questions
Concept explainers
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Question
Carrie's Clothes, Inc. has a seven-year bond outstanding that pays $50 annually. The face
-
What is the bond's coupon rate? Round your answer to two decimal places.
%
-
What is the current yield? Round your answer to two decimal places.
%
-
What is the yield to maturity? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest whole number.
%
Transcribed Image Text:Interest Factors for the Present Value of an Annuity of One Dollar
Time
Period
(e.g.
year)
1%
2%
3%
4%
5%
6%
7%
8%
9%
10% 12% 14% 16% 18% 20% 24% 28% 32%
36%
1
0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.862 0.847 0.833 0.806 0.781 0.758 0.735
2
1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.605 1.566 1.528 1.457 1.392 1.332 1.276
3
2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.246 2.174 2.106 1.981 1.868 1.766 1.674
3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.798 2.690 2.589 2.404 2.241 2.096 1.966
4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.274 3.127 2.991 2.745 2.532 2.345 2.181
6 5.795 5.601 5.417 5.242 5.076 4.917 4.766 4.623 4.486 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2.759 2.534 2.399
7.
6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.039 3.812 3.605 3.242 2.937 2.678 2.455
8.
7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.344 4.078 3.837 3.421 3.076 2.786 2.540
8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.985 5.759 5.328 4.946 4.607 4.303 4.031 3.566 3.184 2.868 2.603
10
9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 4.833 4.494 4.193 3.682 3.269 2.930 2.650
11
10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.988 5.453 5.029 4.656 4.327 3.776 3.335 2.978 2.683
12 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.197 4.793 4.439 3.851 3.387 3.013 2.708
13 12.134 11.348 10.635 9.986 9.394 8.534 8.358 7.904 7.487 7.103 6.424 5.842 5.342 4.910 4.533 3.912 3.427 3.040 2.727
14
13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.468 5.008 4.611 3.962 3.459 3.061 2.740
15 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.060 7.606 6.811 6.142 5.575 5.092 4.675 4.001 3.483 3.076 2.750
16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.312 7.824 6.974 6.265 5.669 5.162 4.730 4.003 3.503 3.088 2.758
17 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.002 7.120 6.373 5.749 5.222 4.775 4.059 3.518 3.097 2.763
18
16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 5.818 5.273 4.812 4.080 3.529 3.104 2.767
19
17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 5.877 5.316 4.844 4.097 3.539 3.109 2.770
20
18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.514 7.469 6.623 5.929 5.353 4.870 4.110 3.546 3.113 2.772
25
22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873 6.097 5.467 4.948 4.147 3.564 3.122 2.776
30 25.808 22.937 19.600 17.292 15.373 13.765 12.409 11.258 10.274 9.427 8.055 7.003 6.177 5.517 4.979 4.160 3.569 3.124 2.778
Transcribed Image Text:Interest Factors for the Present Value of One Dollar
Time
Period
(e.g.,
year)
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
12% 14% 15% 16%
18%
20%
24%
28%
.926
.857
962
952
.806
.650
1
.990
.980 971
.943 935
917
.909 .893
.877 .870
.862
.847
.833
.781
.842
772
.610
477
2
980
.961
943
925
907
.890 .873
.826
797
.769
.756
.658
743
718
.694
971
.942
.915
889 .864
.840 .816
.794
.751
.712
.675
.641
.609
579
.524
4
961
924 .889 .855
.823
.792
.763
.713
.735
.708
.683 .636 592
.572
552
.516
482
423
373
951
906 863 822
784
.747
.681
650
.621
.567 519
497
476
437
402
341
291
.942
888 .838 790
.746
.705 .666 .630
.596
564 507
456
432
410
370
335
.275
227
7
933
.871
.813
.760
.711
.665 .623 583
547
.513
452
400 376
354 314
.279
222
.178
.139
108
8.
923
.853
467
.789
.766
731 .677 .627 .582
540
502
404
351
327
305 .266 .233
.179
914
.837
.703 645 592 .544
500
.144
460
422
424
361
308
.284
263 226 194
10
905
.820
.744
.676 .614 558 508
463
386
322
.270 247
.227 .191
.162
.116
.085
.650
.625
.601
11
.896
804
.722
.585
.527
475
429
.388
350
287
.094
.237
208
215
.195 .162
135
.066
887
879
12
788
.701
.557
.497
444
397
356
319
.257
187
.168
.137
.112
.076
.052
13
773
.681
.530
469
415
368 326
.290
.229
.182
.163
.145
.116
.093
.061
.040
14
15
.160
.140
.099
.084
.870
758
743
505
.442
417
.299
.078
.065
.661
577
388
340
.263
205
141
.125
.049
.032
.861
.642
.555
.481
362
315
275
.239
.183
.123
.108
.040
.025
.458
.436
16
.853
.728
.623
534
.394
339
.292
.252
.218
.198
.163
123
.107 .093 .071
.054
.032
.019
.015
17
.844
.714
.605
513
371
317
.270
.231
.026
.146
.130
.108
.093 .080 .060 .045
296
276
258
700
.350
331
18
.836
.587
494
416
.250
.212
.180
.095 .081 .069 .051
.038 .021 .012
19
.828
.686
570
475
396
.232
.194
.164
.009
.116
.104
.083
.070
.060 .043 .031
.017
014
20
.820
673
554
456
377
312
215
.178
.149
.073
.061
.051 .037
.026
.007
25
780
610
478
375
.295
233
.184
.146
.116
.092
.059
.038
.030
.024
.016
.010
.005
.002
30
742
552
.412
308
.231
.174
.131
.099
.075
.057 .033
.020
.015
.012 .007 .004
.002
.001
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