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Calculate the value of a bond that matures in 18 years and has a $1,000 par...

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Finance

Calculate the value of a bond that matures in 18 years and has a$1,000 par value. The annual coupon interest rate is 13 percent andthe? market's required yield to maturity on a comparable-risk bondis 15 percent.

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3.8 Ratings (524 Votes)

Statemnet showing Price or Intrinsic Value
Particulars Time PVf @15% Amount PV
Cash Flows (Interest)                          1.00                   0.8696       130.00               113.04
Cash Flows (Interest)                          2.00                   0.7561       130.00                 98.30
Cash Flows (Interest)                          3.00                   0.6575       130.00                 85.48
Cash Flows (Interest)                          4.00                   0.5718       130.00                 74.33
Cash Flows (Interest)                          5.00                   0.4972       130.00                 64.63
Cash Flows (Interest)                          6.00                   0.4323       130.00                 56.20
Cash Flows (Interest)                          7.00                   0.3759       130.00                 48.87
Cash Flows (Interest)                          8.00                   0.3269       130.00                 42.50
Cash Flows (Interest)                          9.00                   0.2843       130.00                 36.95
Cash Flows (Interest)                        10.00                   0.2472       130.00                 32.13
Cash Flows (Interest)                        11.00                   0.2149       130.00                 27.94
Cash Flows (Interest)                        12.00                   0.1869       130.00                 24.30
Cash Flows (Interest)                        13.00                   0.1625       130.00                 21.13
Cash Flows (Interest)                        14.00                   0.1413       130.00                 18.37
Cash Flows (Interest)                        15.00                   0.1229       130.00                 15.98
Cash Flows (Interest)                        16.00                   0.1069       130.00                 13.89
Cash Flows (Interest)                        17.00                   0.0929       130.00                 12.08
Cash Flows (Interest)                        18.00                   0.0808       130.00                 10.50
Cash flows (Maturity Amount)                        18.00                   0.0808    1,000.00                 80.80
Intrinsic Value of Bond or Current Bond Price               877.44
Value of bond is $877.44

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Transcribed Image Text

Calculate the value of a bond that matures in 18 years and has a$1,000 par value. The annual coupon interest rate is 13 percent andthe? market's required yield to maturity on a comparable-risk bondis 15 percent.

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