QUESTION FOUR To expand its business, ABC Company would like to issue a bond with a face value of $1,000, 10% coupon and maturity of 10 years from now. What is the value of the bond if the required rate of return is (a) 8%; (b) 10%; and (c) 12%?
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- A bond that has features: coupon of rate of 5 percent principal: $1,000 term to maturity: 10 years a. what will the holder receive when the bond matures? b. if the current rate of interest on comparable debt is 8 percent, what should be the price of this bond? would you expect the firm to call this bond? why? c. if the bond has a sinking fund that requires the firm to set aside annually with a trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for ten years if the fundas earn 8 percent annually and there is $100 million oustanding?To expand its business, the Computer Source Ltd. would like to issue bonds with par value of $1,000,coupon rate of 10%, and maturity of 10 years from now. Required: a) What is the value of the bond if the required rate of return is i) 8%, ii) 10%, and iii) 12%?b) Name each of these bonds based on values calculated in part aAssume that you wish to purchase a 30-year bond that has a maturity value of P1,000 and a coupon interest rate of 9.5%, paid semiannually. If you require a 6.75% rate of return on this investment, what is the maximum price that you should be willing to pay for this bond? P1,352 P1,450 P675 P1,111
- Scenario: Suppose Greenback Corporation, an Australian company, issued 10-year bonds with a maturity value of AUD 100 and a coupon rate of 6%. a) What is the estimated bond price if the required rate of return is 4%? b) What is the estimated bond price if the required rate of return is 6%?c) What is the estimated bond price if the required rate of return is 8%?d) What is the estimated bond price if the required rate of return is 10%?e) With regards to the above calculations, describe how the required rate of return affect bond prices.Scenario: Suppose Greenback Corporation, an Australian company, issued 10-year bonds with a maturity value of AUD 100 and a coupon rate of 6%. a) What is the estimated bond price if the required rate of return is 4%? b) What is the estimated bond price if the required rate of return is 6%?c) What is the estimated bond price if the required rate of return is 8%?d) What is the estimated bond price if the required rate of return is 10%?e) With regards to the above calculations, describe how the required rate of return affect bond prices. Give answer fast2. Above what coupon rate could you profitably buy a $100,000 face-value 10-year Treasury bond if your discount rate is 6% and the bond's current price is $114,720.17?
- dieH uoisenn Your company wants to raise $9.0 million by issuing 20-year zero-coupon bonds. If the yield to maturity on the bonds will be 4% (annual compounded APR), what total face value amount of bonds must you issue? The total face value amount of bonds that you must issue is $ (Round to the nearest cent.) Enter your answer in the answer box and then click Check Answer.4) A coupon bond pays this amount every 6 months; $ 30.00 bgs for the number of payments/year; 2 The bond also pays at maturity the par (face) value; $ 1,000.00 Number of years until maturity 15 The required return of holders of this bond is; 8.00% bgs a) What is the PV of the CFs, or what would be the fair price to purchase this bond? b) If the required return of holders of this bond is; 6.00% bgs What is the PV of the CFs, or what would be the fair price to purchase this bond? c) If the required return of holders of this bond is; 4.00% What is the PV of the CFs, or what would be the fair price to purchase this bond? to purchase this bond? bgs d) If the previous bond sells for; $ (976.00) What must be the yield to maturity for this bond (aka IRR) ? (to…Question1:Moore Company is about to issue a bond with semiannual coupon payments, a coupon rate of8%, and a par value of $1,000. The yield to maturity for this bond is 10%.a. What is the bond price if it matures in five or twentyyears? b. What do you notice about the bond price in relationship to the bond’smaturity? Question2:J&J Exporters paid a $1.80 per share annual dividend last month. The company is planning onpaying $2.00, $2.50, $2.75, and $3.00 a share over the next four years, respectively. After thatthe dividend will be constant at $3.20 per share per year. What is the market price of this stock ifthe market rate of return is 13 percent?
- 1. Calculate the value of a fixed-rate bond with fifteen years left to maturity, annualcoupon payments at a coupon rate of 5.0%, face value of $1,000, and yield-to-maturityof 3.5%. hint: See solution for similar problem in lecture presentation on Bonds.Should the calculated value be greater than or less than $1,000?Suppose you want to purchase a bond with a $1,000 par value maturing in 4 years with an 8% annual coupon interest rate, and has a market interest rate of 6%. What’s the price or the value of this bond? Select one: a. $1,069.31 b. $1,000 c. $9712 d. 927.66Activity 2 XYZ Co. Ltd is considering investing in a bond currently selling for $8,800. The coupon rate is 8%. The bond has a face value of $10,000 and maturity of 4 years. The appropriate discount rate for bonds of this type is 10%. (i) What is the intrinsic value of the bond? Should the company buy the bond? (ii) What is the yield to maturity on this bond?