BOND PRICING WORKSHEET
Determine the value of the bond for the following, use (submit) an excel file with your answers.
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?
