Question

Problem 4 Intro Lomack Company's bonds have a 11-year maturity, a 10% coupon, paid semiannually, and a par value of $1,000. The market interest rate is 3%, with semiannual compounding. Part 1 What is the bond's price (in $)? B Attempt 1/10 for 10 pts. No decimals Submit

Answer 1

4.1). To find the bond's price, we need to put the following values in the financial calculator:

INPUT	11x2=22	3/2=1.5		(10%/2)x1,000=50	1,000
TVM	N	I/Y	PV	PMT	FV
OUPUT			-1,651.73

So, Bond's Price = $1,651.73

5.1). To find the bond's price, we need to put the following values in the financial calculator:

INPUT	16x2=32	3.1/2=1.55		(4.9%/2)x1,000=24.5	1,000
TVM	N	I/Y	PV	PMT	FV
OUPUT			-1,225.71

So, Bond's Price = $1,225.71

5.2). To find the bond's price, we need to put the following values in the financial calculator:

INPUT	14x2=28	4.1/2=2.05		(4.9%/2)x1,000=24.5	1,000
TVM	N	I/Y	PV	PMT	FV
OUPUT			-1,084.58

So, Bond's Price = $1,084.58