Zero-Coupon Discount Rate
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I would like to have the solution to the following sample problems in EXCEL format, so that I can see the formulas used. Thanks.
1. What is the current value of a zero-coupon bond that pays a face value of $1,000 at maturity in 9 years if the appropriate discount rate is 7%.
Please round your answer to the nearest cent.
2. What interest rate is implicit in a $1,000 par value zero-coupon bond that matures in 5 years if the current price is $430.
Please specify your answer in decimal terms and round your answer to the nearest thousandth (e.g., enter 12.3 percent as 0.123).
3. What is the current value of a $1,000 bond with a 8% annual coupon rate (paid annually) that matures in 9 years if the appropriate discount rate is 5%.
Please round your answer to the nearest cent.
4. What is the current value of a $1,000 bond with a 5% annual coupon rate (paid semi-annually) that matures in 6 years if the appropriate stated annual discount rate is 8%.
Please round your answer to the nearest cent.
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Solution Summary
A few problems related to zero coupon, discount rate, interest, current value, face value calculations are solved here in an Excel file.
Education
- BEng, Allahabad University, India
- MSc , Pune University, India
- PhD (IP), Pune University, India
Recent Feedback
- " In question 2, you incorrectly add in the $3.00 dividend that was just paid to determine the value of the stock price using the dividend discount model. In question 4 response, it should have also been recognized that dividend discount models are not useful if any of the parameters used in the model are inaccurate. "
- "feedback: fail to recognize the operating cash flow will not begin until the end of year 3."
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