Share Market Assignment | Finance

Instructions After reading Parrino, Kidwell, & Bates' Chapter 8, you need to answer the following Questions & Problems 8.1, 8.2, and 8.3 in page 262 (at the end of the chapter and on the lower section of the page). Note: If possible, use Excel's financial functions to develop your answers. I am attaching a pic file of the problems at hand along with the lecture notes and powerpoint slides to assist.

FINANCE

Answer to Problem 8.1
Assumption for Fair Value = $ 1,000.00
Number of years = 10
Coupon rate = 8%
YTM = 6%
Cash Flows in Bond
Year Cash Flow PVF@6% PV
1 $ 80.00 0.943 $ 75.47
2 $ 80.00 0.890 $ 71.20
3 $ 80.00 0.840 $ 67.17
4 $ 80.00 0.792 $ 63.37
5 $ 80.00 0.747 $ 59.78
6 $ 80.00 0.705 $ 56.40
7 $ 80.00 0.665 $ 53.20
8 $ 80.00 0.627 $ 50.19
9 $ 80.00 0.592 $ 47.35
10 $ 1,080.00 0.558 $ 603.07
Value = $ 1,147.20

Answer to Problem 8.2
Assumption for Fair Value = $ 1,000.00
Number of years = 5
Coupon rate = 5.5%
YTM = 7.25%
Cash Flows in Bond
Year Cash Flow
PVF@7.25
% PV
1 $ 55.00 0.932 $ 51.28
2 $ 55.00 0.869 $ 47.82
3 $ 55.00 0.811 $ 44.58
4 $ 55.00 0.756 $ 41.57
5 $ 1,055.00 0.705 $ 743.47
Maximum
price of
bond $ 928.72

Answer to Problem 8.3
Assumption for Fair Value = $ 1,000.00
Number of years = 3
Coupon rate = 6.1%
YTM = 5.80%
Cash Flows in Bond
Year Cash Flow PVF@5.80% PV
1 $ 61.00 0.945 $ 57.66
2 $ 61.00 0.893 $ 54.50
3 $ 1,061.00 0.844 $ 895.90
Market Value
of Bond= $ 1,008.05