Question

Instructions 3 4 5 6 7 8 9 10 (3 of 10) XYZ bonds have a 7% coupon rate paid quarterly. The par value is $1,000 and the bonds
0 0
Add a comment Improve this question Transcribed image text
Answer #1

By trial and error

Quarter Cashflow PV of cashflow
1 70 64.59948
2 70 59.61562
3 70 55.01626
4 70 50.77174
5 70 46.85469
6 70 43.23984
7 70 39.90387
8 70 36.82528
9 70 33.9842
10 70 31.36231
11 70 28.9427
12 70 26.70977
13 70 24.6491
14 70 22.74742
15 70 20.99245
16 70 19.37288
17 70 17.87825
18 70 16.49894
19 70 15.22605
20 70 14.05135
21 70 12.96729
22 70 11.96686
23 70 11.04361
24 70 10.19159
25 70 9.40531
26 70 8.679688
27 70 8.010048
28 70 7.392071
29 70 6.821771
30 70 6.29547
31 70 5.809773
32 70 5.361547
33 70 4.947903
34 70 4.566171
35 70 4.21389
36 70 3.888787
37 70 3.588766
38 70 3.311892
39 70 3.056379
40 70 2.820578
41 70 2.60297
42 70 2.40215
43 70 2.216824
44 70 2.045795
45 70 1.887962
46 70 1.742305
47 70 1.607886
48 70 1.483837
49 70 1.369359
50 70 1.263712
51 70 1.166217
52 70 1.076243
53 70 0.99321
54 70 0.916584
55 70 0.845869
56 70 0.78061
57 70 0.720386
58 70 0.664808
59 70 0.613518
60 70 0.566185
61 70 0.522504
62 70 0.482192
63 70 0.444991
64 70 0.41066
65 70 0.378977
66 70 0.349739
67 70 0.322757
68 70 0.297856
69 70 0.274876
70 70 0.25367
71 70 0.234099
72 1070 3.302296
874.001

Pre-tax cost of debt = 8.36%

Add a comment
Know the answer?
Add Answer to:
Instructions 3 4 5 6 7 8 9 10 (3 of 10) XYZ bonds have a...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT