Homework page 250

Homework page 250 - 7-1 PV factor of sum =(1 i)^-n =(1...

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7-1 PV factor of sum = (1+i)^-n = (1+9%)^-10 =1.09^-10 = 0.4224 PV factor of annuity = 1 - (1+i)^-n / i = 1 - (1+9%)^-10 / 9% = 1 - 0.4224 / 9% = 0.5775 / 9% = 6.417 = PV factor of Sum * Par Value + PV factor of annuity * coupon payment = 0.4224 * 1,000 + 6.417 * 80 = 422.4 + 513.3 = 935.76 7-2 985-1000=15 7-2 A ) YTM: 7.215701 B) \$985 because if the yield stays constant, interest rates stay the same so the price stays the same. 7-3 PV = \$1,028.60. 7-4 YTM = 6.62% (FV 1,000, PMT 40, N 20, PV 1,100) 7-5 PVIF Formula PVIF(ytm%, n) = 1 / (1 + ytm%)^n

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