You are employed by an investment bank to estimate the value of a coupon-paying bond with the following features. It has a face value of $100,000, pays quarterly coupons at a rate of 10% p.a. and the market required yield to maturity is 8% p.a. compounding quarterly. There is one full quarter until the next payment will be received and the bond matures in 4 years. Which of the following is closest to the market value of the bond? Group of answer choices A) $106,789 B) Need more information to answer the question C) $105,288 D) $93,473 E) $94,871

Q: You are considering buying a semi-annual coupon bond with a stated coupon rate of 9 % (note that the...

A: Par value of bond (FV) = 1000 (Assumed) Coupon rate = 9% Coupon amount (C) = 1000*0.09 = 90 Years to...

Q: A young woman 22 years old has just graduated from college. She accepts a good job and desire to est...

A: Current age = 22 Years Annual deposit (P) = P2000 Interest rate (r) = 15% Future value (FV) = 1,000,...

Q: You are a banker to Livingstone Thompson Limited, a textile manufacturing company. Livingstone Thomp...

A: Given: Year Cash flows 0 -$30,000,000 1 $8,000,000 2 $8,000,000 3 $8,000,000 4 $8,000,0...

Q: You have just won the Super Duper Lotto. Although the prize is advertised as $30 million, you actual...

A: The present value of winning is calculated as present value of all cash flows. 

Q: You are negotiating the terms of a legal settlement. You have been given several different settlemen...

A: Present Value means value of future benefits at the current date. It is calculated by dividing 1+r f...

Q: If the effective interest rate is 24%, what nominal rate of interest is charged for a continuously c...

A: Effective interest rate = 24% e = 2.7182818284590452353602874713527  

Q: Bond Pricing. A 30-year-maturity bond with face value of $1,000 makes semiannual coupon payments and...

A: Bonds Bonds are the liabilities of the company which is issued to raise the funds required to financ...

Q: Assume we are now in mid- or late February 2022. After conducting your own analysis, you have made a...

A: Behavioral finance is finance that helps in understanding the behavior and mindset of investors in t...

Q: You want to buy a motorcycle for $11,500 plus freight of $145 and other delivery charges of $125. Yo...

A: Cost = $11500 Freight = $145 Delivery charges = $125 Total cost = 11500+145+125 = $11770 Down paymen...

Q: The Philippine Association of Board Examiners (PABE) desires to award a P1,600 scholarship annually ...

A: To determine up to which year scholarship can be awarded, it is required to calculate the interest e...

Q: Consider the following mutually exclusive projects, for Oz Corp, a firm using a discount rate of 10%...

A: Rules for Mutually Exclusive project:-The corporation is free to choose any of the projects if they ...

Q: Assume that in 2018, a copper penny struck at the Philadelphia mint in 1796 was sold for $495,000.  ...

A: Yield to maturity can be calculated by following function in excel =RATE (nper, pmt, pv, [fv], [typ...

Q: projects payback? Year Cash flows 1 3 $300 -$500 $150 $200

A: Payback period is the time taken to recover the cost of the investment. The payback period does not ...

Q: Wolseley manufacturing Co. invests in a group of risky projects, which increases the unsystematic ri...

A: We know, as per Capital Asset Pricing Model (CAPM),  Re= Rf + [ (Rm - Rf) x Beta ] where, Re= cost o...

Q: What is the monthly payment on a loan of $5,000 at APR = 6% for 5 years.

A: Loan amount (PV) = $5000 Interest rate = 6% Monthly interest rate (r) = 6%/12 = 0.50% Period = 5 Yea...

Q: The company has equity of € 35,000 and interest-bearing debt of € 15,000. The interest premium on th...

A: The capital asset pricing model is a model which shows or signifies the relationship between the sys...

Q: You arrange a mortgage from the Pinder Bank of Australia. The amount you borrow is $760,000 with pay...

A:

Q: What are some actions that stockholders can take to ensure that management's and stockholders' inter...

A: In a corporation, stockholders and management are two separate bodies. Stockholders are the owners o...

Q: Find the difference between the sums of annuity due and ordinary annuity for the following data: Per...

A: Annuity means a set of finite number of payments which are made in equal time intervals and same in ...

Q: Please show work. Thank you

A: The future value is calculated as per time value equation

Q: Hank’s Barbecue just paid a dividend of $1.55 per share. The dividends are expected to grow at a 9.5...

A: 1) Value of the stock today = [D0(1 + g1) / (R − g1)]{1 − [(1 + g1) / (1 + R)]^t} + [(1 + g1) / (1 +...

Q: The constant rupee value plan requires a. Investors to fix the expected value of their portfolio ...

A: Introduction : There are generally three types of numerical plans : 1. Constant rupee valuation plan...

Q: Alice needs P 4,000 per year for four years to go to college. Her father invested P 5,000 in 7% acco...

A: Future value of an amount is calculated as: = Amount * (1+rate)^number of periods

Q: Credit Risk. A bond's credit rating provides a guide to its risk. Suppose that long-term bonds rated...

A: Credit Rating of Bond is the rating by which default risk of bond can be analysed. Higher the credit...

Q: Sharon Bohnette owns 1,300 shares of Northern Chime Company. There are six seats on the board of dir...

A: Voting for the seats on the board of directors can be done using the traditional method or the cumul...

Q: To finance a vacation in 4 years, Elsie saves $450 at the beginning of every six months in an accoun...

A: Future Value The future value is the amount that will be received at the end of a certain period. Th...

Q: 5. The average car depreciates at a rate of 20% the first year after purchase and 15% every year the...

A: Cashflows means movement of cash. This movement can be positive and negative. Positive movement mean...

Q: Find the payment necessary to amoritize a 4% loan of $1600 compounded quarterly, with 9 quarterly pa...

A: Loan amount (PV) = $1600 Interest rate = 4% Quarterly interest rate (r)  = 4%/4 = 1% Number of quart...

Q: A car is to be paid P15000 forever at the rate of 9%. What is the amount of the car after 9 years at...

A: Cash flow of car = P15,000 Rate = 9% Time = 9 years Rate = 6% compounded quarterly To Find: Amount o...

Q: An investment of $600,000 is made in equipment that qualifies as 3-year equipment for MACRS-GDS depr...

A: To calculate the Net Present Value, the rate to be used will be the nominal rate, which will be calc...

Q: Aunt May Inc.'s business is booming. and it needs to raise more capital. The company purchases suppl...

A: When the effects of compounding over time are considered, an effective annual interest rate is the t...

Q: What's the market price for a $100,000 Par, 3.25% Coupon bond with 18 years to maturity that is yiel...

A: Given, Par value of bond $100,000 Coupon rate is 3.25% term to maturity is 18 years YTM 1.79%

Q: A man wants to recieve P800 immediately and pay it back in one year. The bank charges a simple disco...

A: Borrowings/Mortgage are the loan which is taken by the individual to meet its financial requirements...

Q: title: principle of investment Suppose the dividend of a stock today is 6%. The interest rate is 5% ...

A: First, we will calculate the present value of the stock by using the required formula then we will c...

Q: Sally received an invoice dated on 15 February 2020 worth RM4 goods that included a prepaid freight ...

A: Companies gives different kind of discounts to the customers to increase the sales. But the cost to ...

Q: Your company is expected to earn (as a cash flow) $3 million next year, $3.06 million the following ...

A: The value of the company is calculated as the discounted value of cash flows.  

Q: the lender charges the borrower 1.8% per quarter. find the equivalent nominal rate of interest. incl...

A: The equivalent nominal rate of interest is calculated as quarterly rate multiplied by compounding fr...

Q: Calculate the Indirect compensation of Mr. Ali, with the following information (all in RO): Basic Sa...

A:

Q: - 42. Abby C. Dee borrowed P10,620.00 from Jakey L. Em on October 30, 2020 simple interest rate. How...

A: Amount borrowed (X) = P 10620 n = 4 months r = 8% He needed to pay at the end of Feb 2021, but paid ...

Q: uestion 5 Jack deposits $5000 in an account which pays 5 percent compounded quarterly. How much will...

A: The compound interest is the method in which interest earned is reinvested which gives us even more ...

Q: Lilly's Tax has an EPS of $2.40, a book value per share of $22.84, and a market/book ratio of 27X. W...

A: The equity multiplier is a risk indicator that measures how much of a company's assets are funded by...

Q: A major property developer is concerned about lack of sales due to local economic conditions. To ens...

A: Compound interest (also known as compounding interest) is interest calculated on a loan or deposit u...

Q: If a RM10,000 investment will return RM25,000 to you in five years, then to the nearest percent what...

A: Investment = RM10,000 Return = RM25,000 Period = 5 Years

Q: A firm has total debt of $1,400 and a debt–equity ratio of .25. What is the value of the total asset...

A: Debt = $1400 Debt to equity ratio = 0.25 Equity = debt/Debt to equity ratio            = 1400/0.25  ...

Q: Taggart Inc. is considering a project that has the following cash flow data. What is the project's p...

A: Project's Payback means the time when project's cash inflows cover the initial investments.  Payback...

Q: Mylan Pharm is investing in a new cancer treatment gene therapy. They have projected the cost of fin...

A: NPV means PV of all the benefits which will arise from the project. NPV is computed by taking the di...

Q: Out of which equation is NOT CORRECT ? Please remember to select "WHICH IS NOT CORRECT" Select one: ...

A: Answer -  Total Liabilities = Total Assets - Shareholder's funds - Capital.  This equation is incorr...

Q: Tiffany owned 10 shares of GIA stock which was selling for $150 per share when the company declared ...

A: As you have posted multiple questions and not specified which one to be answered, the solution to th...

Q: Mr. Jones borrowed P 20,000 from a lending firm and an additional P 5,000 after 2 months.  He paid P...

A: Here,

Q: A dam project of the Philippine Government was estimated to cost Php 340000000 during its constructi...

A: Capitalized Cost: The capitalized cost is the present value of recurring costs that occur over very ...

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: