Assignment On Present Value Valuation

Added on - 30 Sep 2019

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Solution-16%Explanation:Current Price of bond:nper= 10, FV = $1000, PMT = 6% of Face Value = $60 , Rate=0.08PV =PV(Rate,nper,PMT,[fv])PV=PV(0.08,10,60,1000)= - $865.80Step 2:FV = 865.80, PV = -1000, nper = 20, PMT = 60So,RATE = RATE ( nper, PMT, pv,[fv])Rate =RATE (20,60,-1000,865.80)=5.62%or 6%Solution-2The bond will no longer sell at a premium but will instead trade at a discount.Solution-3$80.63Calculation:PV = FV / (1 + YTM)nPV = $100 / (1 + 4.4%)5PV = $80.63
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