Homework Soursealculate the fair present values of the following bonds all
alculate the fair present values of the following bonds, all of which pay interest semiannually, have a face value of $1,000, have 8 years remaining to maturity, and have a required rate of return of 12.5 percent.
The bond has a 8.2 percent coupon rate. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
The bond has a 10.2 percent coupon rate. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
The bond has a 12.5 percent coupon rate. (Do not round intermediate calculations.)
Solution
Given details:
Bond 1
Bond 2
Bond 3
FV = Future Value =
-$1,000.00
-$1,000.00
-$1,000.00
Interest rate = Rate or Yield or Interest rate =
12.500000%
12.500000%
12.500000%
Frequency = payment per year =
2
2
2
Number of years =
8
8
8
PMT = Payment or Coupon yearly =
-$82.00
-$102.00
-$125.00
Using financial calculator BA II Plus - Input details:
Bond 1
Bond 2
Bond 3
I/Y = Rate or yield / frequency of coupon in a year =
6.250000
6.250000
6.250000
PMT = Payment = Coupon / frequency =
-$41.00
-$51.00
-$62.50
N = Total number of periods = Number of years x frequency =
16
16
16
FV = Future Value =
-$1,000.00
-$1,000.00
-$1,000.00
CPT > PV = Present Value of the instrument =
$786.41
$885.75
$1,000.00
| Given details: | Bond 1 | Bond 2 | Bond 3 |
| FV = Future Value = | -$1,000.00 | -$1,000.00 | -$1,000.00 |
| Interest rate = Rate or Yield or Interest rate = | 12.500000% | 12.500000% | 12.500000% |
| Frequency = payment per year = | 2 | 2 | 2 |
| Number of years = | 8 | 8 | 8 |
| PMT = Payment or Coupon yearly = | -$82.00 | -$102.00 | -$125.00 |
