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Charlotte's Clothing issued a 8 percent bond with a maturity date of 18 years. Six years have passed and the bond is selling for $865. Assume that the bond pays interest annually.

Charlotte's Clothing issued a 8 percent bond with a maturity date of 18 years. Six years have passed and the bond is selling for $865. Assume that the bond pays interest annually.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 11P
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Charlotte's Clothing issued a 8 percent bond with a maturity date of 18 years. Six years have passed and the bond is selling for $865. Assume that the bond pays interest annually.

  1. What is the current yield? Round your answer to two decimal places.

     %

  2. What is the yield to maturity? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest whole number.

     %

  3. If four years later the yield to maturity is 10 percent, what will be the price of the bond? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.

    $  

Appen dir D pen. Time Period 18% 20% 24% 28% 8% 12% 14% 15% 16% 8% 9% 10% (e.g., year) 5% 6% 7% 806 .781 1.080 2% 3% 4% .862 .847 .833 1% .893 .877 .870 2 980 961 .943 .925 907 .890 .873 .857 .842 .826 .797 .769 .756 .743 718 .694 .650.610 3 .971 942 .915 .889 .864 .840 .816 .794 .772 .751 .712 .675 .658 .641 .609 .579 .524 .477 .909 .943 .935 .926 917 1.166 1.260 980 .971 962 .952 1 .990 4 961 .924 .889 .855 .823 .792 5 .951 .906 .863 .822 .763 735 .708 .683 .636 .592 .572 .552 .516 .482 .423 .373 .713 .681 .650 .621 567 .519 .497 476 .437 .402 .341 .291 .227 1.360 1. 469 1.5 .784 .747 .275 6 .942 .888 .838 .790 .746 705 66 7630 .596 .564 .507 .456 .432 .410 7 933 .871 .813 .760 .711 .665 .623 .583 547 .513 452 400 376 .354 314 .279 222 8 923 .853 914 370 .335 587 1.67 .178 14 1.82 51 1.993 .139 .179 .144 .789 .731 .677 .627 .582 .540 .502 .467 .766 703 .645 .592 .404 .351 .327 .305 266 .233 .108 .460 424 361 .308 .284 .263 226 .194 .322 .270 .247 544 .500 2.172 2.367 837 .227 .191 .162 .116 .085 .905 .820 .744 .676 .614 .558 508 .463 422 .386 10 .237 .215 .195 .162 .135 .094 .066 .208 .187 .168 .137 .112 .076 .052 .475 .429 388 350 .287 11 .896 12 .887 788 13 .804 .722 .650 .585 .527 .701 .625 557 773 .681 .601 .530 2.580 2.813 3.066 3.342 3.642 .257 444 397 356 .319 415 368 .326 .290 .229 .182 .163 .145 .116 .093 .061 .040 388 340 .299 .263 .205 .160 .141 .125 .099 .078 .049 .032 .497 .469 .879 .870 .758 .661 .577 14 .505 .442 .040 .025 15 861 .743 .642 555 .481 417 362 .315 275 .239 .183 .140.123 .108 .084 .065 .019 231 .198 .146 .108 .093 .080 .060 .045 .026 .015 .180 .130 .095 .081 .069 .051 .038 .021 .012 16 .853 728 .623 .534 .458 .394 339 .292 .252 .218 .163 .123 .107 .093 .071 .054 .032 3.970 4.5 328 5.0 717 5.56 .270 17 .844 .714 .605 .513 18 .836 .700 .587 19 .436 .371 317 .416 .350 .296 .250 396 331 .377 .312 .212 .276 .232 .194 .164 116 .083 .070 .060 .043 .031 .017 .009 .104 .073 .061 494 828 .686 .570 475 .051 .037 .026 .014 .007 .149 142 6.11e 104 20 .820 673 .554 456 258 .215 .178 .059 .038 .030 .024 .016 .010 .005 .002 6.727 25 780 .610 478 .375 .295 .233 .184 .146 .116 .092 .001 23 10.835 30 742 .552 412 308 .231 .033 .020 .015 .012 .007 .004 .002 .174 .131 .099 .075 .057 B 17.449
Transcribed Image Text:Appen dir D pen. Time Period 18% 20% 24% 28% 8% 12% 14% 15% 16% 8% 9% 10% (e.g., year) 5% 6% 7% 806 .781 1.080 2% 3% 4% .862 .847 .833 1% .893 .877 .870 2 980 961 .943 .925 907 .890 .873 .857 .842 .826 .797 .769 .756 .743 718 .694 .650.610 3 .971 942 .915 .889 .864 .840 .816 .794 .772 .751 .712 .675 .658 .641 .609 .579 .524 .477 .909 .943 .935 .926 917 1.166 1.260 980 .971 962 .952 1 .990 4 961 .924 .889 .855 .823 .792 5 .951 .906 .863 .822 .763 735 .708 .683 .636 .592 .572 .552 .516 .482 .423 .373 .713 .681 .650 .621 567 .519 .497 476 .437 .402 .341 .291 .227 1.360 1. 469 1.5 .784 .747 .275 6 .942 .888 .838 .790 .746 705 66 7630 .596 .564 .507 .456 .432 .410 7 933 .871 .813 .760 .711 .665 .623 .583 547 .513 452 400 376 .354 314 .279 222 8 923 .853 914 370 .335 587 1.67 .178 14 1.82 51 1.993 .139 .179 .144 .789 .731 .677 .627 .582 .540 .502 .467 .766 703 .645 .592 .404 .351 .327 .305 266 .233 .108 .460 424 361 .308 .284 .263 226 .194 .322 .270 .247 544 .500 2.172 2.367 837 .227 .191 .162 .116 .085 .905 .820 .744 .676 .614 .558 508 .463 422 .386 10 .237 .215 .195 .162 .135 .094 .066 .208 .187 .168 .137 .112 .076 .052 .475 .429 388 350 .287 11 .896 12 .887 788 13 .804 .722 .650 .585 .527 .701 .625 557 773 .681 .601 .530 2.580 2.813 3.066 3.342 3.642 .257 444 397 356 .319 415 368 .326 .290 .229 .182 .163 .145 .116 .093 .061 .040 388 340 .299 .263 .205 .160 .141 .125 .099 .078 .049 .032 .497 .469 .879 .870 .758 .661 .577 14 .505 .442 .040 .025 15 861 .743 .642 555 .481 417 362 .315 275 .239 .183 .140.123 .108 .084 .065 .019 231 .198 .146 .108 .093 .080 .060 .045 .026 .015 .180 .130 .095 .081 .069 .051 .038 .021 .012 16 .853 728 .623 .534 .458 .394 339 .292 .252 .218 .163 .123 .107 .093 .071 .054 .032 3.970 4.5 328 5.0 717 5.56 .270 17 .844 .714 .605 .513 18 .836 .700 .587 19 .436 .371 317 .416 .350 .296 .250 396 331 .377 .312 .212 .276 .232 .194 .164 116 .083 .070 .060 .043 .031 .017 .009 .104 .073 .061 494 828 .686 .570 475 .051 .037 .026 .014 .007 .149 142 6.11e 104 20 .820 673 .554 456 258 .215 .178 .059 .038 .030 .024 .016 .010 .005 .002 6.727 25 780 .610 478 .375 .295 .233 .184 .146 .116 .092 .001 23 10.835 30 742 .552 412 308 .231 .033 .020 .015 .012 .007 .004 .002 .174 .131 .099 .075 .057 B 17.449
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