A bond that matures in 12 years has a $1,000 par value. The annual coupon interest rate is 11 percent and the market's required yield to maturity on a comparable-risk bond is 17 percent. What would be the value of this bond if it paid interest annually_____? What would be the value of this bond if it paid interest semiannually_____? a. The value of this bond if it paid interest annually would be $nothingm. (Round to the nearest cent.)
| Computatiob of Value of Bond , If interest Paid Annually | |
| Annual
Interest on Bond (1000*11%) (a) |
$110.00 |
| Period | 12 |
| CumpVAF @ 17% for 12 year (b) | 4.988387 |
| Presetn Value of Interest (c=aXb) | $548.72 |
| Present
Value of Bond par value on Maturity (1000X 0.15197) (d) |
$15,197.00 |
| Present Value of Bond ( c+d) | $15,745.72 |
| Computatiob of Value of Bond , If interest Paid Semi Annually | |
| Semi
Annual Interest on Bond (1000*11%*6/12) (a) |
$55.00 |
| Period | 24 |
| CumpVAF @ 8.5% for 24 (b) | 10.104097 |
| Presetn Value of Interest (c=aXb) | $555.73 |
| Present
Value of Bond par value on Maturity (1000X 0.141157) (d) |
$1,411.57 |
| Present Value of Bond ( c+d) | $1,967.30 |
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