A company has issued 10-year bonds, with a face value of P1,000,000 in P1,000 units. Interest at 16% is paidquarterly. If an investor desires to earn 20% nominal interest on P100,0000 worth of these bonds, what would2.the selling price have to be?3. A P1,500-bond which will mature in 10 years and with a bond rate of 15% payable annually is to be redeemed atpar at the end of this period. If it is sold now for P1,390, determine the yield at this price.4. A young mechanical engineer is considering establishing his own small company. An investment of P400,000 willbe required, which will be recovered in 15 years.It is estimated that sales will be P800,000 per year and that operating expenses will be as follows:

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the selling price have to be?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 16P

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Question

A company has issued 10-year bonds, with a face value of P1,000,000 in P1,000 units. Interest at 16% is paid
quarterly. If an investor desires to earn 20% nominal interest on P100,0000 worth of these bonds, what would
2.
the selling price have to be?
3. A P1,500-bond which will mature in 10 years and with a bond rate of 15% payable annually is to be redeemed at
par at the end of this period. If it is sold now for P1,390, determine the yield at this price.
4. A young mechanical engineer is considering establishing his own small company. An investment of P400,000 will
be required, which will be recovered in 15 years.
It is estimated that sales will be P800,000 per year and that operating expenses will be as follows:

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