Kilgore Natural Gas has a $1,000 par value bond outstanding that pays 10 percent annual interest....

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Finance

Kilgore Natural Gas has a $1,000 par value bond outstanding thatpays 10 percent annual interest. The current yield to maturity onsuch bonds in the market is 12 percent. Use Appendix B and AppendixD for an approximate answer but calculate your final answer usingthe formula and financial calculator methods.
Compute the price of the bonds for these maturity dates:(Do not round intermediate calculations. Round your finalanswers to 2 decimal places. Assume interest payments areannual.)
Bond Price
a. 40 years ?
b. 20 years ?
c. 5 years ?

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3.6 Ratings (297 Votes)

K = N

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

k=1

K =40

Bond Price =? [(10*1000/100)/(1 + 12/100)^k] + 1000/(1 + 12/100)^40

k=1

Bond Price = 835.12

K = N

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

k=1

K =20

Bond Price =? [(10*1000/100)/(1 + 12/100)^k] + 1000/(1 + 12/100)^20

k=1

Bond Price = 850.61

K = N

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

k=1

K =5

Bond Price =? [(10*1000/100)/(1 + 12/100)^k] + 1000/(1 + 12/100)^5

k=1

Bond Price = 927.9

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Kilgore Natural Gas has a $1,000 par value bond outstanding thatpays 10 percent annual interest. The current yield to maturity onsuch bonds in the market is 12 percent. Use Appendix B and AppendixD for an approximate answer but calculate your final answer usingthe formula and financial calculator methods.Compute the price of the bonds for these maturity dates:(Do not round intermediate calculations. Round your finalanswers to 2 decimal places. Assume interest payments areannual.)Bond Pricea.40 years?b.20 years?c.5 years?

Kilgore Natural Gas has a $1,000 par value bond outstanding that pays 10 percent annual interest....

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