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Bond Valuation

Purchase Price, Expected Coupon Equivalent - Commercial Page

A commercial paper note with $1 million par value and maturing in 60 days has an expected discount return (DR) at maturity of 6 percent. What was its purchase price? What is this note's expected coupon-equivalent (investment return) yield (IR)? DR = (Par value - Purchase price) / Par value X 360 / Days

Calculating the Value of a Bond: Two Year Maturity

A bond which has 2 years to maturity has a coupon of 5% and a face value of $100,000. Where coupons are paid semi-annually and the investors required return is 6%pa. What will be the IN value of this bond for investors?

Applying approximate yield to maturity

Question to work: a. Bonds issued by West Motel Chain have a par value of $1000, are selling for #1,100, and have 20 years remaining to maturity. The annual interest payment is 13.5% ($135). Compute the approximate yield to maturity. Use formula as follows: Approximate yield to maturity (Y') = Annual interest payment

Bonds / Ytm/ HPR

On November 1, 2009 you purchased two callable bonds with 6 years remaining to maturity at the time of purchase and 3 years to remaining to call. The coupon interest rate of both bonds is 10% and par value is $1,000. The first bond pays annual coupon and the second - semi-annual. At the time you purchased the bond, the annual-co

Journalize bond interest; amortize bond discount

Company Balance Sheet as of December 31, 2009. Current liabilities Bond interest payable $168,000 Long-term liabilities Bonds payable, 7% due January 1, 2020 $2,400,000 Less: Discount on bonds payable

Managerial Finance: Coleman Technologies Inc.

See the attached file. Coleman Technologies Inc. Cost of capital Coleman Technologies is considering a major expansion program that has been proposed by the company's information technology group. Before proceeding with the expansion, the company must estimate its cost of capital. Assume that you are an assistant to Jerry Le

Calculate bond value today

Two-years ago, Trans-Atlantic Airlines sold a $250 million bond issue to finance the purchase of new jet airliners. These bonds were issued in $1000 denominations with an original maturity of 12 years and a coupon rate of 12%. Determine the value today of one of these bonds to an investor who requires a 14% rate of return on the

Capital, risk, profit, pension planning and maturity

See attached file with 15 problems. 1. A firm wants to expand its business and to do so it must issue new capital (debt, common stock, or preferred stock) since its internal cash flow is not sufficient to pay for the expansion. The firm wants to issue the cheapest type of capital. Given the following information, what type of


Problem 23-2 A Treasury bond futures contract has a settlement price of 89'08. What is the implied annual yield? Problem 17-5 Suppose that 1 Swiss Franc could be purchased in the foreign exchange market for 60 U.S. cents today. If the franc appreciated 10% tomorrow against the dollar, how many francs would a dollar buy


On March 1, 2005, Matt purchased $63,000 of Lawson Co.'s 8%, 20-year bonds at face value. Lawson Co. has paid the annual interest due on the bonds regularly. On March 1, 2010, market interest rates had risen to 12%, and Matt is considering selling the bonds. Required: Using the present value table in in the attachments b

Corporate Finance

1.Baron Inc. bonds have a face value of $1000 and mature in 10 years. The coupon rate is 18%, and coupons are paid semiannually. The yield is 12% compound semiannually. Find the bond's price. 2. Danish Inc. has cumulative preferred stock that pays an annual dividend of $4.50. If the current price is $37.50, what is the r

Current yield/yield to maturity

Apple has 8% coupon bonds on the market with 18 years to maturity. The bonds make semiannual payments and currently sell for 93% of par, or $930. Compute: 1. The Current Yield 2. The Yield to Maturity What is the difference between these two?

Finance Exam Practice Problems

1) After-Tax Cost of Debt LL Incorporated's currently outstanding 11 percent coupon bonds have a yield to maturity of 14 percent. LL believes it could issue at par new bonds that would provide a similar yield to maturity. If its marginal tax rate is 40 percent, what is LL's after-tax cost of debt? Round your answer to two decim

Finance:Cost of capital, Capital budgeting and Bonds.

I need step by step calculations using EXCEL functions showing how these 7 problems would be solved. The answers to each problem is at the end of the attachment. Please use EXCEL functions/formulas to show how each problem can be solved and a brief explanation of what the answers mean. That will help me to greatly understa

Managing Debt for Different Companies

1. Delaware Steel Company has $100 million of 13 percent debentures outstanding. The indenture (loan covenants) limits additional borrowing such that the total interest coverage (EBIT/interest) is at least three times. Delaware's EBIT last year was $52 million. How much could Delaware borrow under a term loan at 13 percent inter

Bond Entries Accounting

3. On January 1, Porter Corporation issued $600,000, 6%, 5-year bonds at face value. Interest is payable semiannually on July 1 and January 1. Prepare journal entries to record the (a) Issuance of the bonds. (b) Payment of interest on July 1, assuming no previous accrual of interest. (c) Accrual of interest on December 31.

After-Tax Cost of Debt; Project's NPV; Ethier's shareholders financial risk

See attached file. Problem 9-2, "After-Tax Cost of Debt" from Chapter 9, page 371. Explain how cost of capital financing techniques affects the organization. Problem 10-1, "NPV" from Chapter 10, page 414. Explain how to use capital budgeting and relevant cash flow to compare investment alternatives. Problem 15-3, "Premium

Calculating the Lowest Price for a Day

A corn futures contract closed yesterday at a price of $2.42 a bushel. The maximum daily price range is $0.20 and the daily price limit is $0.10. Therefore, the minimum change in the price today is $0.10 a bushel. Highest closing price for today is $2.62 a bushel. Lowest closing price for today is $2.32 a bushel. The mos

Bond with 5 year maturity with face value $100

Suppose a bond with 5 year maturity with face value $100 and 8% coupon rate which is equal to the current bank interest rate what is the corresponding cash flow (sequence) generated by this 5 year coupon If the bond issuer decided to increase their discount rate to 9.2% what is the current price (present value) for this bond.

Current Bond Price

Grossnickle Corporation issued 20-year, non callable, 7.8% annual coupon bonds at their par value of $1,000 one year ago. Today the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 19 years to maturity?

Yield to Maturity for a Bond

You are a bond-buyer for the brokerage firm Wecan-Barely-Ketchum, and you have three separate parties interested in purchasing bonds from your available portfolio selection. Group 1 requires a minimum 15% yield. Group 2 has said that they are out for a quick killing and will settle for no less than 8%, but do not require more th

Select any publicly traded bond. Provide the following inf

Select any publicly traded bond. Provide the following information: Item Data Data Source Coupon Rate and frequency Price Maturity Date Rating (Optional) Quoted Yield to Maturity Confirm the yield to maturity on the bond. Response shows how to find publicly traded bonds and do this for any bond.

Financial Mathematics: Bond Valuation

This morning IBM issued a five year $100,000 face value bond paying yearly interest with a 5% coupon rate. This afternoon interest rates jumped to 6%. What will the bond now sell for?

Calculate the stock's dividend yield, and capital gains yield

Assume that a stock sold for $1.90 on January 1 and ended the year at a price of $2.50. In addition, the stock paid dividends of $0.20 per share. Calculate the stock's dividend yield, capital gains yield, and total rate of return for the year. Assume that an individual earned a total return of -5% on a stock this year, earne