Blossom Railroad Co is about to issue $318,000 of 10 year bonds paying an 12% interest rate with interest payable annually. The discount rate for such securities is 8%. How much can Blossom expect to receive for the sale of these bonds?

18. An engineer has a current balance of P110 000.00 in his savings account. The bank will be giving 6% interest compounded semi-annually for the next two years and 8% interest compounded semi-annually thereafter. A large corporation is offering P10 000.00, 8% bonds that pay interest every six months for P11 000.00. If the maturity is five years, and bond earnings are deposited in the bank, should he withdraw and purchase the bonds, or should he leave his savings in the bank? Use future worth analysis. (Ans. Money should be left in the bank; P156 654.05; P147 706.39)

On November 1, 2013, Matthew Corp. sold a $600 million bond issue to finance the purchase of a new distribution facility.  These bonds were issued in $1,000 denominations with a maturity date of November 1, 2033. The bonds have a coupon rate of 8.00% with interest paid semiannually.    Required: Determine the value today, November 1, 2023 of one of these bonds to an investor who requires a 10 percent return on these bonds. Why is the value today different from the par value? Assume that the bonds are selling for $870.00. Determine the current yield and the yield-to-maturity. Explain what these terms mean. Explain what layers or textures of risk play a role in the determination of the required rate of return on Matthew’s bonds. For each of the following events, explain what the impact would be on the yield-to-maturity: The bond is downgraded by a rating agency. The economy seems to be shifting from a recession to a boom economy. The bond is subordinated to other bonds. Congressional…

On June 1st, 2020, Coca Cola (KO) issued bonds for one billion dollars. The bonds have a par value of $1,000, coupon rate of 2.75% payable semiannually, and 40 years maturity (maturity date: 6/1/2060).   What is the average annual return for an investor who purchased these bonds at launch (6/1/20) for $970.30 and sold them three years later (6/1/23) for $681.83? HINT: Don’t divide HPR/3. Consider the effects of compounding. Find the annual interest rate that would make the initial investment of $970.30 become $681.83 after three years.       -9.90% per year.     -9.50% per year.     -0.95% per year.     +9.90% per year.