BOND PRICING WORKSHEET
Determine the value of the bond for the following, use (submit) an excel file with your answers, I should be able to click on the answer and see your formula
- Indicate if the price is at Par, Premium or Discount (where applicable)
1) A bond matures in 5 years, has an annual coupon payment of $110, and a par value of $2,000? Assume a required rate of return of 8.69%.
2) What is the value of a bond that has a par value of $1,000, a coupon of $120 (annually), and matures in 10 years? Assume a required rate of return of 7.02%.
3) What price would you be willing to pay for a bond that has a face value of $1000, a coupon rate of 8%, will take 20 years to mature, and your required rate of return is 7%.
4) Corporate bonds have a 11% coupon rate. Interest is paid semiannually. The bonds have a par value of $1,000 and will mature 8 years from now, investors’ required rate of return is 9.5%.
—Note— Semiannual payments are a little different, consider the number of payments increases, and the amount of interest is divided by 2 (in this case and the next)
5) You have a bond that pays a 6% coupon rate, with semiannual payments, and 8 years left to maturity. If your required rate of return is 4.5%, what should you pay for this bond?
6) Master-Built Inc has bonds that mature in 6 1/2 years with a par value of $1,000. They pay a coupon rate of 9% with semiannual payments. If the required rate of return on these bonds is 11% what is the bond’s value?
7) Nu Ocean Cruises sold an issue of 12-year $1,000 par bonds to build new ships. The bonds pay 4.85% interest, annually. Today’s required rate of return is 9%. How much should these bonds sell for today?.
8) Builders Square Inc. just issued $1,000 par 30-year bonds. The bonds sold for $1,107.20 and pay interest semiannually. Investors require a rate of 7.75% on the bonds. What is the bonds’ coupon rate?
9). National Distributors has $1,000 face value bonds outstanding with a market price of $1,013. The bonds pay interest semiannually, mature in 11 years, and have a yield to maturity of 6.87 percent. What is the coupon payment?
10) A firm has bonds outstanding that were issued 8 years ago at their par value of $1,000. These bonds have 12 years to maturity and a coupon rate of 6 percent, with interest paid semiannually. The required return on these bonds has increased to 14 percent. What is the current value of one of these bonds?
