Explore BrainMass

Explore BrainMass

    Calculating the Market Value of Bonds

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. On August 1, 2002, Kathy purchased $18,000 of ISD Co.'s 18%, 14-year bonds at face value. ISD Co. has paid the semiannual interest due on the bonds regularly. On August 1, 2006, market rates of interest had fallen to 16%, and Kathy is considering selling the bonds.

    Using the present value tables (Table 6-4 and Table 6-5), calculate the market value of Kathy's bonds on August 1, 2006. (Round pv factor to 4 decimal places and the final answer to 2 decimal places.)
    Market Value___________________

    2. On March 1, 2005, Steve purchased $60,000 of Blackstone Co.'s 2%, 17-year bonds at face value. Blackstone Co. has paid the annual interest due on the bonds regularly. On March 1, 2010, market interest rates had risen to 6%, and Steve is considering selling the bonds.

    Using the present value tables (Table 6-4 and Table 6-5), calculate the market value of Steve's bonds on March 1, 2010. (Round PV factor to 4 decimal places and the final answer to 2 decimal places.)
    Market Value________________________

    © BrainMass Inc. brainmass.com June 4, 2020, 1:56 am ad1c9bdddf
    https://brainmass.com/business/annuity/calculating-market-value-bonds-428873

    Solution Summary

    Using Excel, this solution illustrates how to compute the market values of bonds.

    $2.19

    ADVERTISEMENT