Exodus Limousine Company has $1,000 par value bonds outstanding at 18 percent interest. The bonds will...

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Finance

Exodus Limousine Company has $1,000 par value bonds outstandingat 18 percent interest. The bonds will mature in 40 years. UseAppendix B and Appendix D for an approximate answer but calculateyour final answer using the formula and financial calculatormethods.
Compute the current price of the bonds if the percent yield tomaturity is: (Do not round intermediate calculations. Roundyour final answers to 2 decimal places. Assume interest paymentsare annual.)
Bond Price
a. 6 percent ?
b. 10 percent ?

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4.0 Ratings (797 Votes)

K = N

Bond Price =? [(Annual Coupon)/(1 + YTM)^k] + Par value/(1 + YTM)^N

k=1

K =40

Bond Price =? [(18*1000/100)/(1 + 6/100)^k] + 1000/(1 + 6/100)^40

k=1

Bond Price = 2805.56

K = N

Bond Price =? [(Annual Coupon)/(1 + YTM)^k] + Par value/(1 + YTM)^N

k=1

K =40

Bond Price =? [(18*1000/100)/(1 + 10/100)^k] + 1000/(1 + 10/100)^40

k=1

Bond Price = 1782.32

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Exodus Limousine Company has $1,000 par value bonds outstandingat 18 percent interest. The bonds will mature in 40 years. UseAppendix B and Appendix D for an approximate answer but calculateyour final answer using the formula and financial calculatormethods.Compute the current price of the bonds if the percent yield tomaturity is: (Do not round intermediate calculations. Roundyour final answers to 2 decimal places. Assume interest paymentsare annual.)Bond Pricea.6 percent?b.10 percent?