Miller Corporation has a premium bond making semiannual paym

Miller Corporation has a premium bond making semiannual payments. The bond pays a coupon of 11 percent, has a YTM of 9 percent, and has 17 years to maturity. The Modigliani Company has a discount bond making semiannual payments. This bond pays a coupon of 9 percent, has a YTM of 11 percent, and also has 17 years to maturity. What is the price of each bond today? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Price of Miller Corporation bond Price of Modigliani Company bond If interest rates remain unchanged, what do you expect the prices of these bonds to be 1 year from now? In 6 years? In 11 years? In 15 years? In 17 years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g32.16.) Miller Corporation Bond Modigliani Company Bond Price of bond 1 year 6 years 1 years 15 years 17 years

Price of Miller corporation

Using present value function in M S Excel

pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =17*2 =34 pmt = 1000*11%/2 = 55 fv = 1000 type = 0

PV(4.5%,34,55,1000)

($1,172.47)

Price of Modigliani corporation bond

Using present value function in M S Excel

pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =17*2 =34 pmt = 1000*9%/2 = 45 fv = 1000 type = 0

PV(5.5%,34,45,1000)

($847.63)

Price of bond

Miller corporation

Year

Using PV function in MS excel

pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =16*2 =32 pmt = 1000*11%/2 = 55 fv = 1000 type = 0

PV(4.5%,32,55,1000)

($1,167.89)

pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =11*2 =22 pmt = 1000*11%/2 = 55 fv = 1000 type = 0

PV(4.5%,22,55,1000)

($1,137.84)

pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =6*2 =12 pmt = 1000*11%/2 = 55 fv = 1000 type = 0

PV(4.5%,12,55,1000)

($1,091.19)

pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =2*2 =4 pmt = 1000*11%/2 = 55 fv = 1000 type = 0

PV(4.5%,4,55,1000)

($1,035.88)

pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =0*2 =0 pmt = 1000*11%/2 = 55 fv = 1000 type = 0

PV(4.5%,0,55,1000)

($1,000.00)

Price of bond

Modigliani corporation

Year

Using PV function in MS excel

pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =16*2 =32 pmt = 1000*9%/2 = 45 fv = 1000 type = 0

PV(5.5%,32,45,1000)

($850.96)

pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =11*2 =22 pmt = 1000*9%/2 = 45 fv = 1000 type = 0

PV(5.5%,22,45,1000)

($874.17)

pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =6*2 =12 pmt = 1000*9%/2 = 45 fv = 1000 type = 0

PV(5.5%,12,45,1000)

($913.81)

pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =2*2 =4 pmt = 1000*9%/2 = 45 fv = 1000 type = 0

PV(5.5%,4,45,1000)

($964.95)

pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =0*2 = 0 pmt = 1000*9%/2 = 45 fv = 1000 type = 0

PV(5.5%,0,45,1000)

($1,000.00)

	Price of Miller corporation	Using present value function in M S Excel	pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =172 =34 pmt = 100011%/2 = 55 fv = 1000 type = 0	PV(4.5%,34,55,1000)	($1,172.47)
	Price of Modigliani corporation bond	Using present value function in M S Excel	pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =172 =34 pmt = 10009%/2 = 45 fv = 1000 type = 0	PV(5.5%,34,45,1000)	($847.63)

Price of bond			Miller corporation
Year	Using PV function in MS excel
1	pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =162 =32 pmt = 100011%/2 = 55 fv = 1000 type = 0	PV(4.5%,32,55,1000)	($1,167.89)
6	pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =112 =22 pmt = 100011%/2 = 55 fv = 1000 type = 0	PV(4.5%,22,55,1000)	($1,137.84)
11	pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =62 =12 pmt = 100011%/2 = 55 fv = 1000 type = 0	PV(4.5%,12,55,1000)	($1,091.19)
15	pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =22 =4 pmt = 100011%/2 = 55 fv = 1000 type = 0	PV(4.5%,4,55,1000)	($1,035.88)
17	pv(rate,nper,pmt,fv,type) = rate =9/2 =4.5% nper =02 =0 pmt = 100011%/2 = 55 fv = 1000 type = 0	PV(4.5%,0,55,1000)	($1,000.00)

Price of bond			Modigliani corporation
Year	Using PV function in MS excel
1	pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =162 =32 pmt = 10009%/2 = 45 fv = 1000 type = 0	PV(5.5%,32,45,1000)	($850.96)
6	pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =112 =22 pmt = 10009%/2 = 45 fv = 1000 type = 0	PV(5.5%,22,45,1000)	($874.17)
11	pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =62 =12 pmt = 10009%/2 = 45 fv = 1000 type = 0	PV(5.5%,12,45,1000)	($913.81)
15	pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =22 =4 pmt = 10009%/2 = 45 fv = 1000 type = 0	PV(5.5%,4,45,1000)	($964.95)
17	pv(rate,nper,pmt,fv,type) = rate =11/2 =5.5% nper =02 = 0 pmt = 10009%/2 = 45 fv = 1000 type = 0	PV(5.5%,0,45,1000)	($1,000.00)

Miller Corporation has a premium bond making semiannual payments. The bond pays a coupon of 11 percent, has a YTM of 9 percent, and has 17 years to maturity. T

Miller Corporation has a premium bond making semiannual paym

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