Question

Exodus Limousine Company has $1,000 par value bonds outstanding at 9 percent interest. The bonds will mature in 30 years with annual payments Compute the current price of the bonds if the current yield to maturity is: (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answers to 2 decimal places.) Price of the Oren

Answer 1

Price = PV of CFs from It.

If YTM is 4%:

Year	CF	PVf @4%	Disc CF
1	$      90.00	0.9615	$       86.54
2	$      90.00	0.9246	$       83.21
3	$      90.00	0.8890	$       80.01
4	$      90.00	0.8548	$       76.93
5	$      90.00	0.8219	$       73.97
6	$      90.00	0.7903	$       71.13
7	$      90.00	0.7599	$       68.39
8	$      90.00	0.7307	$       65.76
9	$      90.00	0.7026	$       63.23
10	$      90.00	0.6756	$       60.80
11	$      90.00	0.6496	$       58.46
12	$      90.00	0.6246	$       56.21
13	$      90.00	0.6006	$       54.05
14	$      90.00	0.5775	$       51.97
15	$      90.00	0.5553	$       49.97
16	$      90.00	0.5339	$       48.05
17	$      90.00	0.5134	$       46.20
18	$      90.00	0.4936	$       44.43
19	$      90.00	0.4746	$       42.72
20	$      90.00	0.4564	$       41.07
21	$      90.00	0.4388	$       39.50
22	$      90.00	0.4220	$       37.98
23	$      90.00	0.4057	$       36.52
24	$      90.00	0.3901	$       35.11
25	$      90.00	0.3751	$       33.76
26	$      90.00	0.3607	$       32.46
27	$      90.00	0.3468	$       31.21
28	$      90.00	0.3335	$       30.01
29	$      90.00	0.3207	$       28.86
30	$      90.00	0.3083	$       27.75
30	$ 1,000.00	0.3083	$     308.32
Price of Bond			$ 1,864.60

If YTM is 14%:

Year	CF	PVf @14%	Disc CF
1	$      90.00	0.8772	$       78.95
2	$      90.00	0.7695	$       69.25
3	$      90.00	0.6750	$       60.75
4	$      90.00	0.5921	$       53.29
5	$      90.00	0.5194	$       46.74
6	$      90.00	0.4556	$       41.00
7	$      90.00	0.3996	$       35.97
8	$      90.00	0.3506	$       31.55
9	$      90.00	0.3075	$       27.68
10	$      90.00	0.2697	$       24.28
11	$      90.00	0.2366	$       21.30
12	$      90.00	0.2076	$       18.68
13	$      90.00	0.1821	$       16.39
14	$      90.00	0.1597	$       14.37
15	$      90.00	0.1401	$       12.61
16	$      90.00	0.1229	$       11.06
17	$      90.00	0.1078	$         9.70
18	$      90.00	0.0946	$         8.51
19	$      90.00	0.0829	$         7.47
20	$      90.00	0.0728	$         6.55
21	$      90.00	0.0638	$         5.74
22	$      90.00	0.0560	$         5.04
23	$      90.00	0.0491	$         4.42
24	$      90.00	0.0431	$         3.88
25	$      90.00	0.0378	$         3.40
26	$      90.00	0.0331	$         2.98
27	$      90.00	0.0291	$         2.62
28	$      90.00	0.0255	$         2.30
29	$      90.00	0.0224	$         2.01
30	$      90.00	0.0196	$         1.77
30	$ 1,000.00	0.0196	$       19.63
Price of Bond			$     649.87