home work soln mgt 610

home work soln mgt 610 - MGMT 640 Financial Management for...

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MGMT 640 Financial Management for Decision Makers 5-1 Face = $1,000 Yrs to Maturity = 25-5 = 20 Interest Paid 2 semiannually Coupon Yrs To Curr Market Rate Maturity Rate a) 10.00% 20 12.00% b) 10.00% 20 8.00% c) 10.00% 20 10.00% d) Current Yield = Annual Interest Payment/Current Bond Price Annual Current a) PV of Coupons $752.31 Interest Bond Current PV of Par $97.22 Payment Price Yield $849.54 $100.00 / $849.54 = 11.77% b) PV of Coupons $989.64 PV of Par $208.29 $1,197.93 $100.00 / $1,197.93 = 8.35% c) PV of Coupons $857.95 PV of Par $142.05 $1,000.00 $100.00 / $1,000.00 = 10.00% The Altoona Company issued a 25-year bond 5 years ago with a face value of $1,000. The bond pays interest semiannually at a 10% annual rate. a. What is the bond's price today if the interest rate on comparable new issues is 12%? b. What is the price today if the interest rate is 8%? c. What is the price today if the interest rate is 10%?
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home work soln mgt 610 - MGMT 640 Financial Management for...

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