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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