See attached file.
Please refer to tab 3-16 to solve and explain.
A 10-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 5.5%
(2.75% of face value every six months). The semiannually compounded interest rate
is 5.2% (a six-month discount rate of 5.2/2 = 2.6%).
a. What is the present value of the bond?
b. Generate a graph or table showing how the bond's present value changes for semiannually
compounded interest rates between 1% and 15%.
Please see the attachment.
Please see the cell formula for calculation details.
The value of the bond is the ...
The solution explains how to calculate the present value of bond and how it changes with interest rates
Bonds, zero coupons, financial analysis, & Net present value
Net present value (NPV ) at 10%, the payback period, ARR, PI and IRR Problems:
How to adjust for the different timing and risk of alternative investments. The net present value (NPV) of an investment is the difference between the present value of its benefits (inflows) and the present value of its costs (outflows).
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