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Larry's Bank buys 58 bonds of the Puppet House Corp. through a broker. The bonds pay 10 percent annual interest. The yield to maturity (market rate of interest) is 12 percent. The bonds have a 10 year maturity.
Using an assumption of semi-annual interest payments:
A. Compute the price of a bond.
B. Compute the total value of the 58 bonds.
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- The Florida Investment Funds buys 58 bonds of the Gator Corp. through a broker. The bond pays 10 percent annual interest. The Yield to Maturity (market rate of interest) is 12 percent. The bonds have a 10-year maturity. Calculate your final answer using the formula and financial calculator methods. Using an assumption of semiannual interest payments: a) Compute the price of a bond (Do not round intermediate calculations and round your answer 2 decimal places. b) Compute the total value of 58 bonds (Do not round intermediate calculations and round your answer 2 decimal places).San Miguel Company's 18-year, $1,000 par value bonds pay 6.5 percent interest annually. The market price of the bond is $1,105, and your required rate of return is 8.5 percent. a. Compute the bond's expected rate of return. b. Determine the value of the bond to you given your required rate or return. c. Should you purchase the bond? Why or why not? (*You must show your calculation process as well.)The saleemi corporation’s is $1,000 bonds pay 9 percent interest rate annually and have 9 years until maturity. You can purchase the bond for $935. A. What is the yield to maturity on this bond? B. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 9 percent ? A. The yield to maturity on the saleemi bonds is Round to two decimal places
- The saleemi corporation’s $1,000 bonds pay 6 percent interest annually and have 11 years until maturity. You can purchase the bond for $875. A. What is the yield to maturity on this bond? B. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 6 percent? A. The yield to maturity on the saleemi bonds is Round to two decimal placesKrystian Inc. issued 8-year bonds with a face value of $100,000 and a stated rate of 5% when the market rate was 7%. Interest was paid semi-annually. A. Calculate the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. NOTE: The requirement is referring to total interest and principal. B. Would an investor be willing to pay more or less than face value for this bond? Less thanThe Saleemi Corporation's $1,000 bonds pay 6 percent interest annually and have 11 years until maturity. You can purchase the bond for $1,155. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 3 percent?
- Krystian Inc. issued 12-year bonds with a face value of $110,000 and a stated rate of 5% when the market rate was 7%. Interest was paid semi-annually. A. Calculate the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. NOTE: The requirement is referring to total interest and principal. X B. Would an investor be willing to pay more or less than face value for this bond? Less thanMarkway Inc. is contemplating selling bonds. The issue is to be composed of 750 bonds, each with a face amount of $800. Required: 1. Calculate how much Markway is able to borrow if each bond is sold at a premium of $30. 2. Calculate how much Markway is able to borrow if each bond is sold at a discount of $10. 3. Calculate how much Markway is able to borrow if each bond is sold at 92% of par. 4. Calculate how much Markway is able to borrow if each bond is sold at 103% of par. 5. Assume that the bonds are sold for $775 each. Prepare the entry to recognize the sale of the 750 bonds. Record issuance of bonds at discount 6. Assume that the bonds are sold for $950 each. Prepare the entry to recognize the sale of the 750 bonds. Record issuance of bonds at premium(Related to Checkpoint 9.2) (Yield to maturity) The Saleemi Corporation's $1,000 bonds pay 8 percent interest annually and have 11 years until maturity. You can purchase the bond for $875. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 8 percent? a. The yield to maturity on the Saleemi bonds is %. (Round to two decimal places.)
- The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bond L has a maturity of 15 years, and Bond S a maturity of 1 year. a. What will be the value of each of these bonds when the going rate of interest is (1) 5 percent, (2) 8 percent, and (3) 12 percent? Assume that there is only one more interest payment to be made on Bond S. b. Why does the longer-term (15-year) bond fluctuate more when interest rates change than does the shorter-term bond (1 year)?Novak Corporation issues $570,000 of 9% bonds that are due in 8 years and pay interest semi-annually. At the time of issue, the market rate for such bonds is 8%. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Calculate the bonds' issue price by using (1) factor Tables A.2 and A.4, (2) a financial calculator, or (3) Excel function PV. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answer to 0 decimal places, e.g. 5,275.) Issue price of bond $(Related to Checkpoint 9.2) (Yield to maturity) The Saleemi Corporation's $1,000 bonds pay 6 percent interest annually and have 9 years until maturity. You can purchase the bond for $1,115. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 6 percent? a. The yield to maturity on the Saleemi bonds is %. (Round to two decimal places.) C...