FIN-504.week4.problemset4.xlsx - Chapter 6 Interest Rates...

Chapter 6 Interest Rates and Bond Va
Given Data:
CSM Corporation
Coupon-inte 6%
Par Value ###
Maturity 15 years
Current bon ###
Assume that interest on the CSM bond is paid
Compound 2
Modified n = 30
Modified pa ###
Annual r ###
modified r = ###
Trial and Error method: Choose various required rates to determine the current bond value.
Cell B14 should be blank
Cell B15 should have the
The spreadsheet will recalculate each time. Continue the process
equals the current price of the bond (in this problem it is a premium of $874.
Remember that for a bond to be priced at a premium, the coupon
Remember that for a bond to be priced at a discount, the coupon
Year Perio Paymen PV Payments
2014 0
1 ### 28.9296 ### PVA 538.1914
2015 2 ### 27.8974
3 ### 26.9020
2016 4 ### 25.9422 ### PV 336.2307
5 ### 25.0166
2017 6 ### 24.1240 Bond Value $874.42
7 ### 23.2632
2018 8 ### 22.4332 Current Bo $874.42
9 ### 21.6328
2019 10 ### 20.8609
11 ### 20.1166
2020 12 ### 19.3989 Prove the following:
13 ### 18.7067 When k 8% value = $827.08
2021 14 ### 18.0393 ????? value = $874.42
15 ### 17.3956 6% value = ###
2022 16 ### 16.7749
17 ### 16.1764
2023 18 ### 15.5992
19 ### 15.0427
2024 20 ### 14.5059
21 ### 13.9884
2025 22 ### 13.4893
23 ### 13.0080
2026 24 ### 12.5439
25 ### 12.0963
2027 26 ### 11.6647
27 ### 11.2485
2028 28 ### 10.8472
29 ### 10.4601
2029 30 ### 10.0869
2030 30 ### 336.2307
Bond Va $ 874.42
Current $874.42

A)
N= 3 I= 18
PMT = $5,000 $10,871.36
B) 300/0.15 $2,000.00
C) N= 5 I = 16
FV =
$35,000 $16,663.96
D) N = 6 I = 12
PMT= $1,500
FV $7,000 $9,713.54
E) $14,115.27
Present Value of
Cash Flows