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    Bond Value & IRR

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    Please answer the following problem in an Excel file.

    Suppose you are considering purchasing a 10% annual coupon bond, with 15 year remaining. The par value is $1000. Given the rating of the bond investors are requiring 15% return on bonds of this type. What is your estimate of the bond's value, in other words how much are you willing to pay?

    An insurance firm agrees to pay you $3,310 at the end of 20 years if you pay premiums of $100 per year at the end of each year for the 20 years. Find the IRR to the nearest whole percentage point.

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    Solution Preview

    Bond Value & IRR

    Problem:
    Suppose you are considering purchasing a 10% annual coupon bond, with 15 year remaining. The par value is $1000. Given the rating of the bond investors are requiring 15% return on bonds of this type. ...

    Solution Summary

    This posting helps with a problem involving bond value and IRR. This solution is comprised of a detailed explanation to answer what is your estimate of the bond's value, in other words how much are you willing to pay. The explanation is provided in an Excel file.

    $2.19