Purchase Solution

Value of a bond

Not what you're looking for?

Ask Custom Question

How do you calculate the value of a bond that will mature in 14 years and has a face value of $1,000 if the annual coupon interest rate is 7% and the investor's required rate of return is 10%?

Purchase this Solution
Solution Summary

This solution contains step-by-step calculations to determine the value of the bond in an Excel file by using time to maturity, face value, annual coupon interest and required rate of return.

Solution Preview

Please see attached file for the answers:
How do you calculate the value of a bond that will mature in 14 years and has a face value of $1,000 if the annual coupon interest rate is 7% and the investor's required rate of return is 10%?

It has not been mentioned whether annual or semi annual interest is paid.
The value is calculated for both the cases.

To calculate the value of the bond we need to calculate / read from tables the values of
PVIF= Present Value Interest Factor
PVIFA= Present Value Interest Factor for an Annuity
Value of bond= PVIF * Maturity value + PVIFA * ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • Yield To Maturity of the Bond

    Calculate the yield to maturity (YTM) for each bond. b. What relationship exists between the coupon interest rate and yield to maturity and the par value and market value of a bond? Explain.

  • Standard Olive: Convertible Bond Calculations

    71528 Standard Olive: Convertible Bond Calculations Standard Olive Co. has a convertible bond outstanding with a coupon rate of 9 percent and a maturity date of 15 years.

  • Conversion of Bonds

    Second, therefore it is more likely that Scenario A will happen. A convertible bond has two possible sources of value. One is its straight bond value and two is the conversion value of the bond.

  • Financial Accounting :MCQ

    What is the market price of a bond issued at a discount?

  • Convertible Bonds

    Bernanke Corp. has just issued a 30 year callable, convertible bond with a coupon rate of 7 percent annual coupon payments. The bond has a conversion price of $125. The company's stock is selling for $32 per share.

  • Convertible Bonds

    The have a 10 percent annual coupon interest rate and a 20 year maturity. The interest rate on a straight bond of similar risk is currently 12 percent. a.) Calculate the straight bond value of the bond. b.)

  • Bond Conversion

    An analyst has recently informed you that at the issuance of a company's convertible bonds, one of the two following sets of relationships existed: Scenario A: Face value of bond $1,000; Straight Value of Convertible Bond: $900; Market Value of Convertible

  • BOND VALUE AND CURRENT YIELD

    472639 BOND VALUE AND CURRENT YIELD A firm has an outstanding bond issue with an annual coupon rate of 7 percent and 4 years remaining to maturity. The par value is $1000 and the bond pays annual interest.

  • Estimating price of a bond

    Solution describes the steps for estimating fair value of a coupon paying bond.

  • Estimating fair value of a bond

    377873 Bond value is assessed. 1. Find the value of a bond with the following characteristics: (a) face value of $1,000, (b) 8% coupon rate, (c) the bond matures in 14 years, (d) the market rate of interest is 6%. 2.

View More Related Solutions