ZuoTi.Pro
Question

Superior Ltd bonds have an INR 100 face value The promised annual coupon is INR 10...

Superior Ltd bonds have an INR 100 face value
The promised annual coupon is INR 10
The bonds mature in 20 years
The market’s required return on similar bonds is 12% p.a.
Calculate the price of the bond (present value of the future cash flows)

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

Homework Answers

Answer #1

Price of the bond is Present value of future paymert F Annual Coupon Payments and Maturity amount uture payments are Co upon payments is INR 10 Face value is INR 100 and Maturity amount is INR 100 Interest rate is 12% per annum No of vear to maturity is 20 Computation of Present value of Future Pavments Cash Flows Present PVF @ 12% 0.89 0.80 0.71 0.64 0.57 0.51 0.45 0.40 0.36 0.32 0.29 0.26 0.23 0.20 0.18 0.16 0.15 0.13 0.12 0.10 0.10 Present Value Year in INR 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 100.00 Value INR 8.93 7.97 7.12 6.36 5.67 5.07 4.52 4.04 3.61 3.22 2.87 2.57 2.29 2.05 1.83 1.63 1.46 1.30 1.16 1.04 10.37 85.06 6 10 12 13 15 16 17 18 19 20 20 Price of the Bond is INR 85.06/. Approx.

0 0
Add a comment
Know the answer?
Add Answer to:
Superior Ltd bonds have an INR 100 face value The promised annual coupon is INR 10...
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

  • A.Zero Coupon Bonds A 7 year maturity zero coupon corporate bond has an 8% promised yield....

    A.Zero Coupon Bonds A 7 year maturity zero coupon corporate bond has an 8% promised yield. The bond's price should equal B.The Fishing Pier has 6.40 percent, semi-annual bonds outstanding that mature in 12 years. The bonds have a face value of $1,000 and a market value of $1,027. What is the yield to maturity? C.Bond Yields Find the promised yield to maturity for a 7% coupon, $1,000 par 20 year bond selling at $1115.00. The bond makes semiannual coupon...

  • 1. What is the price of a 10% annual coupon bond, with $1000 face value, which...

    1. What is the price of a 10% annual coupon bond, with $1000 face value, which matures in 3 years? Assume the required return of 2.5%. Calculate the present value 2. What is the present value of a $1,000 bond that pays 6% interest and mature 5 in years?

  • The 10-year Coupon Bond has a face value of $1,000, the annual coupon rate is 5...

    The 10-year Coupon Bond has a face value of $1,000, the annual coupon rate is 5 percent (out of its face value), the yield to maturity is 10 percent. (2.a) show me the cash flows of this coupon bond, you can use words or a timeline graph you created. (2.b) compute the price (present value) of this bond (2.c) suppose the yield to maturity increases to 20 percent after one year, computes the new price. (remember that as time passed...

  • 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)...

  • a. Springfield Nuclear Energy Inc. bonds are currently trading at $1,775.16. The bonds have a face value of $1,000​, a coupon rate of 10.5​% with coupons paid​ annually, and they mature in 25 years. W...

    a. Springfield Nuclear Energy Inc. bonds are currently trading at $1,775.16. The bonds have a face value of $1,000​, a coupon rate of 10.5​% with coupons paid​ annually, and they mature in 25 years. What is the yield to maturity of the​ bonds? b. Consider an annual coupon bond with a face value of $100​,12 years to​ maturity, and a price of $76. The coupon rate on the bond is 6​%. If you can reinvest coupons at a rate of...

  • Sawada Insurance Ltd. issues bonds with a face value of $100 million that mature in 12...

    Sawada Insurance Ltd. issues bonds with a face value of $100 million that mature in 12 years. The bonds carry a 6% interest rate and are sold at 104.35 to yield 5.5%. They pay interest semi-annually. (b) Explain why the issuance price of the bonds is not the same as their face value.

  • 1) Bond with a $1.000 par value has an 8 percent annual coupon rate. It will...

    1) Bond with a $1.000 par value has an 8 percent annual coupon rate. It will mature in 4 years, and annual coupon payments are made at the end of each year. Present annual yields on similar bonds are 6 percent. What should be the current price? - a. S1.069.31 b. S1.000.00 c. $9712 d. $927.66 e. none of the above 2) A bond with a ten percent coupon rate bond pays interest semi-annually. Par value is $1.000. The bond...

  • 20- The XYZ Company's bonds have a face value of $1.000, will mature in ten years,...

    20- The XYZ Company's bonds have a face value of $1.000, will mature in ten years, and carry a coupon rate of 12 percent. Assume interest payments are made semi-annually. a. Determine the present value of the bond's price if the required rate of return is 12 percent. b. How would your answer change if the required rate of return is 10 percent? c. How would your answer change if the required return is 16 percent?

  • a. Springfield Nuclear Energy Inc. bonds are currently trading at $1,775.16. The bonds have a face...

    a. Springfield Nuclear Energy Inc. bonds are currently trading at $1,775.16. The bonds have a face value of $1,000​, a coupon rate of 10.5​% with coupons paid​ annually, and they mature in 25 years. What is the yield to maturity of the​ bonds? b. Consider an annual coupon bond with a face value of $100​,12 years to​ maturity, and a price of $76. The coupon rate on the bond is 6​%. If you can reinvest coupons at a rate of...

  • 3. Tennessee Jed Co. (TJC) bonds mature in 9 years and pay an annual coupon of...

    3. Tennessee Jed Co. (TJC) bonds mature in 9 years and pay an annual coupon of 8%. They have a face value of $1,000. a. If the required return b investors is 8%, will these bonds sell at face, at a premium, or at a discount? b. Compute the value of a TJC bond if investors' required return is 10%. c. Value this same TJC bond but with semi-annual coupon payments.

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