Finance homework help?

March 8, 2010 by: nickadmin

So I am working on this problem and a bit confused. I don’t have a financil calculator — trying to use excel
So:
There are 3 bonds
the required rates of return are 7%, 7.5%, 10%
The coupon interest rates are 6.375%, 7.875%, 7.2% respectivly.
The Years to maturity are 27, 12, 11.
They are 1000 par value bonds.
I need to know the values of the bonds

Even if you could tell me what they are so I can check my excel answers

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Comments

One Response to “Finance homework help?”
  1. moule says:
    March 8, 2010 at 12:43 pm

    Bond1
    required rate 7%
    coupon 6.375%
    term 27 years
    $1000 bond
    Annual interest= 0.06375*1000=63.75

    =1000(1.07)^-27 + abs(pv(0.07,27,63.75))
    =160.9304+764.15
    =925.0804

    Bond2
    required rate 7.5%
    coupon 7.875%
    term 12 years
    $1000 bond
    Annual interest= 0.07875*1000=78.75

    =1000(1.075^-12)+abs(pv(0.075,12,78.75))
    =419.84+609.15
    =1029.00

    required rate 7%
    coupon 6.375%
    term 27 years
    $1000 bond
    Annual interest= 0.06375*1000=63.75

    =1000(1.07)^-27 + abs(pv(0.07,27,63.75))
    =160.9304+764.15
    =925.0804

    Bond3
    required rate 10%
    coupon 7.2%
    term 11 years
    $1000 bond
    Annual interest= 0.072*1000=72.00

    =1000(1.10^-11)+abs(pv(0.1,11,75))
    =350.49+467.64
    =818.13