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Corporate Finance - Bonds Yields H.W

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  • Post Date 2018-11-08T08:05:37+00:00
  • Post Category New Samples

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Corporate Finance - Bonds Yields H.W

Corporate Finance - Bonds Yields H.W

INSTRUCTIONS:
Please find the attachment, you may use this book for help (Chapter 6) Ross, Stephen A, Westerfield, Randolph W., and Jordan, Bradford F., Essentials of Corporate Finance, 7th edition, McGraw-Hill Irwin, 2008 ISBN 978-0-07-338246-3
CONTENT:
Answer 19The coupon rate is 8.5%, and the duration to maturity is 20 years. In the situation where new bonds are to be issued, the yield can be calculated to be $1062 using the formula:P=current price+par value2This will then be equated to $42.5 multiplied by the present value annuity factor, with an unknown coupon rate and 40 periods, added to par value of the bond multiplied by the present value factor for 40 periods with an unknown rate.Using a spreadsheet and setting the equati...

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