FIN504.MG.Ch06.07_Student copy.xlsx - Data a b c d e...

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Data: a) $5,000.00 18% b) 300 15% c) 35,000 16% d) 1500 12% 8,500 e) 2000 14% 3,000 5000 7,000 4000 1,000 Answers a) = 5,000 + 5,000 + 5,000 (1+0.18) 1 (1+0.18) 2 (1+0.18) 3
= 5,000 + 5,000 + 5,000 1.18 1.39 1.64 = 4,237.29 + 3,590.92 + 3,043.15 = $10,871.36 b) = 300 0.15 = 2000.00 c) = 35,000 = 35,000 2.10 = $16,663.96 d) = 1,500 + 1,500 + 1,500 + 1,500 + 1,500 + = 1,500 + 1,500 + 1,500 + 1,500 + 1,500 + 1.12 1.25 1.40 1.57 1.76 = 1,339.29 + 1,195.79 + 1,067.67 + 953.28 + 851.14 + = $9,713.53 e) = 2,000 + 3,000 + 5,000 + 7,000 + 4,000 + = 2,000 + 3,000 + 5,000 + 7,000 + 4,000 + 1.14 1.30 1.48 1.69 1.93 = 1,754.39 + 2,308.40 + 3,374.86 + 4,144.56 + 2,077.47 + = $14,115.27 (1.16) 5 (1+0.12) 1 (1+0.12) 2 (1+0.12) 3 (1+0.12) 4 (1+0.12) 5 (1+0.14) 1 (1+0.14) 2 (1+0.14) 3 (1+0.14) 4 (1+0.14) 5
8,500 (1+0.12)6 8,500 1.97 4,306.36 1,000 (1+0.14)6 1,000 2.19 455.59
Data: Par Value 1,000 Coupon interest rate 11% Annual Interest Payment 110 Required rate of return 11% Number of years to maturity 12 Bond Value Answer a) 11.00% 15.00% 8.00% =PV(C18,C21,C19,C17) $1,000.00 $783.18 $1,226.08 b) 11.00% 15.00% 8.00% $0.00 $200.00 $400.00 $600.00 $800.00 $1,000.00 $1,200.00 $1,400.00 $1,000.00 $783.18 $1,226.08 Midland Untilities Required Return Bond Market Value
c) Market value changes when there are changes in required rate of return.
d) The two possible reaons could be:
Data Par Value 1,000 Coupon interest rate 12% Annual Interest Payment 120 Required rate of return 14% Number of years to matu 15 Bond Value a) Period/yrs 15 12 9 6 3 1 $877.16 $886.79 $901.07 $922.23 $953.57 $982.46 b) 15 12 9 6 $820.00 $840.00 $860.00 $880.00 $900.00 $920.00 $940.00 $960.00 $980.00 $1,000.00 $877.16 $886.79 $901.07 $922.23 Chart Title Years of Maturity Bond Value
3 1 $953.57 $982.46
Data A B Par Value 1000 1000 Coupon interest rate 11% 11% Annual Interest Payment 110 110 Required rate of return Number of years to matur 5 15

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