The Credit Corporation sells 900 bonds. Each bond has a parvalue of $1000. The Bonds are sold on January 1, 2010. The interestrate listed on the bond is 8%. The bonds pay interest twice peryear, June 30th and December 31st. The bonds are 15- year bonds.The market interest rate (yield) for these types of bonds(securities) at the time the bonds are sold (January 1, 2010) is 6%annually.
Requirements:
a. What is the total amount of interest paid to the bondholdersover the life of the bonds?
b. What is the present value of the interest payments over thelife of the bonds?
c. What amount is paid to the bondholders to retire the bonds atthe end of 15 years?
d. What is the present value of the face amount of the bonds onJanuary 1, 2010?
e. What is the total amount the bonds sold for on January 1,2010?
f. What is the present value of the bond issue if the marketrate was 10% per year at date of issue?
g. Does the increase or decrease in interest rates in the marketover the life of the bonds impact your calculations in "f" above?Why or Why not? (explain)
The Credit Corporation sells 900 bonds. Each bond has a parvalue of $1000. The Bonds are sold on January 1, 2010. The interestrate listed on the bond is 8%. The bonds pay interest twice peryear, June 30th and December 31st. The bonds are 15- year bonds.The market interest rate (yield) for these types of bonds(securities) at the time the bonds are sold (January 1, 2010) is 6%annually.
Requirements:
a. What is the total amount of interest paid to the bondholdersover the life of the bonds?
b. What is the present value of the interest payments over thelife of the bonds?
c. What amount is paid to the bondholders to retire the bonds atthe end of 15 years?
d. What is the present value of the face amount of the bonds onJanuary 1, 2010?
e. What is the total amount the bonds sold for on January 1,2010?
f. What is the present value of the bond issue if the marketrate was 10% per year at date of issue?
g. Does the increase or decrease in interest rates in the marketover the life of the bonds impact your calculations in "f" above?Why or Why not? (explain)
Related questions
Hartford Research issues bonds dated January 1, 2015, that payinterest semiannually on June 30 and December 31. The bonds have a$28,000 par value and an annual contract rate of 10%, and theymature in 10 years. (Table B.1, Table B.2, Table B.3, and TableB.4) (Use appropriate factor(s) from the tables provided.Round all table values to 4 decimal places, and use the roundedtable values in calculations.) |
| Required: |
| Consider each of the followingthree separate situations. |
| 1. | The market rate at the date ofissuance is 8%. |
| (a) | Complete the below table to determine the bonds' issue price onJanuary 1, 2015. | |||||||||||||||||||||||||
| Total Values are based on n= __? i=__? Cash Flow Table Value Amount Present Value Par value (maturity) ?? ?? ?? Interest (annuity) ?? ?? ?? Price of bonds ??
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