help in homework

New User?

Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Gabriele Enterprises has bonds on the market making annual payments, with nine years to maturity, a par value of $1,000, and selling for $800

Gabriele Enterprises has bonds on the market making annual payments, with nine years to maturity, a par value of $1,000, and selling for $800

Finance

Gabriele Enterprises has bonds on the market making annual payments, with nine years to maturity, a par value of $1,000, and selling for $800. At this price, the bonds yield 7.5 percent. What must the coupon rate be on the bonds? 

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

We can calculate the coupon payment by using the following formula in excel:-

=pmt(rate,nper,-pv,fv)

Here,

Pmt = Coupon payments

Rate = 7.5%

Nper = 9 periods

PV = $800

FV = $1,000

Substituting the values in formula:

= pmt(7.5%,9,-800,1000)

= $43.65

Coupon rate = Annual coupon payment / Par value

= $43.5 / $1,000

= 4.36%

Sitejabber (5.0)

BBC (5.0)

Trustpilot (4.9)

Google (5.0)