ZuoTi.Pro
Question

Bright Sun, Inc. sold an issue of 30-year $1,000 par value bonds to the public. The...

Bright Sun, Inc. sold an issue of 30-year $1,000 par value bonds to the public. The bonds had a 9.76 percent coupon rate and paid interest annually. It is now 9 years later. The current market rate of interest on the Bright Sun bonds is 8.90 percent. What is the current market price (intrinsic value) of the bonds?

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

To find the current bond price, we need to put the following values in the financial calculator:

INPUT 30-9=21 8.90 9.76%*1,000=97.60 1,000
TVM N I/Y PV PMT FV
OUTPUT -1,080.50

So, the current market price (intrinsic value) of the bonds is $1,080.50

1 0
Add a comment
Know the answer?
Add Answer to:
Bright Sun, Inc. sold an issue of 30-year $1,000 par value bonds to the public. The...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

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

  • Bright Sun, Inc. sold an issue of 30-year $1,000 par value bonds to the public. The...

    Bright Sun, Inc. sold an issue of 30-year $1,000 par value bonds to the public. The bonds had a 8.35 percent coupon rate and paid interest annually. It is now 7 years later. The current market rate of interest on the Bright Sun Bonds is 11.29 percent. What is the current market price (intrinsic value) of the bonds? Round the answer to two decimal places.

  • Fresh Water, Inc. sold an issue of 6-year $1,000 par value bonds to the public. The...

    Fresh Water, Inc. sold an issue of 6-year $1,000 par value bonds to the public. The bonds have a 8.86 percent coupon rate and pay interest annually. The current market rate of interest on the Fresh Water, Inc. bonds is 12.08 percent. What is the current market price of the bonds

  • Fresh Water, Inc. sold an issue of 25-year $1,000 par value bonds to the public. The...

    Fresh Water, Inc. sold an issue of 25-year $1,000 par value bonds to the public. The bonds have a 8.41 percent coupon rate and pay interest annually. The current market rate of interest on the Fresh Water, Inc. bonds is 8.25 percent. What is the current market price of the bonds? Round the answer to two decimal places.

  • 5a FYI bonds have a par value of $1,000. The bonds pay an 8% annual coupon...

    5a FYI bonds have a par value of $1,000. The bonds pay an 8% annual coupon and will mature in 11 years. i) Calculate the price if the yield to maturity on the bonds is 7%, 8% and 9%, respectively. ii) What is the current yield on these bonds if the YTM on the bonds is 7%, 8% and 9%, respectively. Hint, you can only calculate current yield after you have determined the intrinsic value (price) of the bonds. iii)...

  • Suppose Ford sold an issue of bonds with a 17-year maturity, a $1500 par value, a...

    Suppose Ford sold an issue of bonds with a 17-year maturity, a $1500 par value, a 12% coupon rate, and semiannual interest payments. (a) Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 7%. At what price would the bonds sell? Sell price = $ (keep 2 decimal places) (b) Suppose that, two years after the bonds' issue, the going interest rate had risen to 15%. At what price would...

  • BridgeWater Inc. has a bond issue outstanding with a $1,000 par value and a maturity of...

    BridgeWater Inc. has a bond issue outstanding with a $1,000 par value and a maturity of 20 years. The bonds have an annual coupon rate of 6.0% with quarterly coupon payments. The current market price for the bonds is $895. The bonds may be called in 3 years for 120% of par. a) What is the quoted annual yield-to-maturity for the bonds? b) What is the quoted annual yield-to-call for the bonds?

  • E10-3 Computing Issue Prices of Bonds Sold at Par, at a Discount, and at a Premium...

    E10-3 Computing Issue Prices of Bonds Sold at Par, at a Discount, and at a Premium LO10-2, 10-4, 10-5 LaTanya Corporation is planning to issue bonds with a face value of $105,000 and a coupon rate of 7 percent. The bonds mature in seven years. Interest is paid annually on December 31. All of the bonds will be sold on January 1 of this year. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the...

  • 36 Yes They May, Inc. has a bond issue outstanding with a $1,000 par value and...

    36 Yes They May, Inc. has a bond issue outstanding with a $1,000 par value and a maturity of 23 years. The bonds have an annual coupon rate of 18.0% with semi-annual coupon payments. The current market price for the bonds is $845. The bonds may be called in 3 years for 118.0% of par. What is the quoted annual yield-to-maturity for the bonds? 10.67% 21.34% 23.87% 30.32% 38.91%

  • Olympic Corp sold an issue of bonds with a 15-year maturity, a $1,000 face value, and...

    Olympic Corp sold an issue of bonds with a 15-year maturity, a $1,000 face value, and a 10% coupon rate with interest being paid semiannually. The market rate of interest when the bonds were issued was 10%. Two years after the bonds were issued, the market rate rose to 13%. The most recent common-stock dividend for Olympic Corp was $3.45 per share. Due to its stable sales and earnings, the firm's management predicts dividends will remain at the current level...

  • Navarro, Inc., plans to issue new zero coupon bonds with a par value of $1,000 to...

    Navarro, Inc., plans to issue new zero coupon bonds with a par value of $1,000 to fund a new project. The bonds will have a YTM of 5.01 percent and mature in 25 years. If we assume semiannual compounding, at what price will the bonds sell?

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