Question

Calculate Bond Price In Follwing Scenario 796 Face Value $ 66,565 Coupon Rate Yeild To Maturity Redemption Value $ 60,000 Years To Manurity Coupon Payment Duration Annually 7% Face Value $ 10,000 Coupon Rate 5% Yeild To Maturity Redemption Value $ 5,000 Years To Manurity Coupon Payment Duration Annually 6% Face Value $ 5,000 Coupon Rate 6% Yeild To Maturity Redemption Value $ 6,000 Years To Manurity Coupon Payment Duration Annually 15

Answer 1

I have attached the answer. I have solved it by 2 methods. Here you go.
aste ay Calculation of Bond Price Given Face Value (FV) .= $ 66,565 6 Coupon Rate (x) = 6% Yield to Maturity (i) = 7% Redemption Value (MV) = $60,000 (maturity Value) Years to maturity (n) = 5 Coupon Payment Duration annually f. Annual Coupon Payment ! L e = Face value of Bond (FV) x Coupon Rate (8) $ 66,565 x 610 $ 3993:9 Formula: Bond Price = ( x PVIFA int mv x PVIFAA C = Annual Coupon Payment has 20 I mv = Maturity Value i = required yield to maturity n = No of years to maturity PVIFA = Present Value Interest Factor of IPVIE - Present value Interest Factor. Annuity Bond Price = C X PVIFA int mV X PVIE in - 3993.9 X PVIFA 7.5t 60,000 XPVIFZS. 3993.9 X 4.1 + 60000 X 0.713 = 16374.99 + 42780 price = $59 154.99 Bond

i OR You can find out the bond price by discounting the future cash inflows. Cash inflows is in the form of Coupon Payments and maturity Value Discounting Rate is yield to maturity - 2. Year Inflow. I 10 Interest | Interest 1. Interest Interest Interest maturity Value -Discounted inflow Amount Discount (71). Cash How 3993.9 0.935 3734.3 3993.9 10.873 34867 3993.9 3259 3993.9 0.763 - 1 3047.3 39939 10.713 28 47-6 60000 0-713 4278 0 1 Total 5915489 Thus Bond Price: $ 59154.9 na

67 Güven: Face Value (FV) = $ 10.000 Coupon Rate (0) = 5.1.1 Yield to maturity (i) = 71 to | Redemption Value (mv) = $5000 Years to Maturity (n) = 5 Coupon payment duration Annually .. Annual Coupon Payment (c) : Face Value of Bond CEV) X Coupon $ 10,000 X 50 = $ 500 Rate (r) Formula Bond Price = CX PVIFA int mV X Prifin C = Annual Coupon Payment (c) My = maturity value n Number of years to matwitty. i= required yield to maturity PYIFA = Present Value Interest Factor PVIF & Present Value Interest Factor of Annuity Bond Price = ( x PVIFA & MV X Prifin 500 X PEAL + 5000 X PIERSI 500 X 41 + 5000 X 0.713 2050 + 3565 Price = $ 5615 Bond OR alternate

You can find out the bond price by discounting the future Cash Inflows. Cash inflows is in i form of coupon payments & maturity | Value Discounting rate is yield to maturity year inflow 1 Discounted cash flow 1 2 3 Interest 10 Interest Interest Interest Interest maturity Value inflow | Discount - Amount Factor (74) 500 0.935 500 0-873 500 0.816 500 0.763 500 0.713 5000 10.713 I Total 467.5 436.5 408 381.5 356.5 3565 156151 Thus Bond Price = $5615

c) Given Face Value (Ev) = $5000 I loupon Rate ( = 6%. Elield to Maturity (i) = 6%. - Redemption Vatue (my) = $6000 Years to Maturity = 15 years loupon Payment Duration Anually .. Annual Coupon Payment = Face Value of Bond & Coupon Rate = $ 5000 x 612 = $ 300 Formula Bond Price = CX PVIFA in + mv x PvIf an C = Annual Coupon Payment My Maturity Value n = Number of years to maturity i= required yield to maturity IPVIFA= present value interest factor of Annuity IPVIF = present value interest factor Bond Price = CX PVIFA In + my x PVF in - 300 x PVIFA + 6000 x PVIE, L = 300 X 9.712 + 6000 x 0.417 = 2913.67 + 2502 Bond = 5415.67 Price OR alternate method & PVIE 6.75

You can find out the Bond Price by discountin the future Cash inflows. Cash inflows is in the form of interest 4 maturity value. Discounting Trate is yield to matweity le 67. Cash year inflow In flow Amt Interest 300 interest 300 10 interest 300 Interest 300 interest 300 Interest 300 I Interest 300 Interest 300 Interest 300 Interest 300 Interest 300 Interest 300 Interest 300 Interest 300 Interest 300 maturity 6000 value Discounting Factor Cot 0.943 0-890 0.839 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 a-497 0-469 0.442 0.417 0.417 Total | Discounted Flow 282-9 267 251-7 237-6 224.1 211.5 199.5 188.1 177-6 167.4 158.1 149.1 140.7 132.6 125.1 2502 1 1 5415 10 Thus Bond Price is $5415