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Homework answers / question archive / What would you pay for a $125,000 debenture bond that matures in 15 years and pays $6,250 a year in interest if you wanted to earn a yield of:     2%? (Round factor values to 5 decimal places, e

What would you pay for a $125,000 debenture bond that matures in 15 years and pays $6,250 a year in interest if you wanted to earn a yield of:     2%? (Round factor values to 5 decimal places, e

Computer Science

What would you pay for a $125,000 debenture bond that matures in 15 years and pays $6,250 a year in interest if you wanted to earn a yield of:

 

 

2%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

3%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

4%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

 

 

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Computation of the amount to pay when yield is 2%-

Amount to pay = Interest * ((1-1/(1+rate)^n)/rate) + (FV/(1+rate)^n)

= $6,250*((1-1/(1+2%)^15)/2%) + ($125,000/(1+2%)^15)

= ($6,250*12.84926) + ($125,000/1.34587)

= $80,307.90 + $92,876.84

= $173,184.74 Or $173,185

 

Computation of the amount to pay when yield is 3%:-

Amount to pay = Interest * ((1-1/(1+rate)^n)/rate) + (FV/(1+rate)^n)

= $6,250*((1-1/(1+3%)^15)/3%) + ($125,000/(1+3%)^15)

= ($6,250 * 11.93794) + ($125,000 / 1.55797)

= $74,612.09 + $80,232.74

= $154,844.84 Or $154,845

 

Computation of the amount to pay when yield is 4%:-

Amount to pay = Interest * ((1-1/(1+rate)^n)/rate) + (FV/(1+rate)^n)

= $6,250*((1-1/(1+4%)^15)/4%) + ($125,000/(1+4%)^15)

= ($6,250 * 11.11839) + ($125,000 / 1.80094)

= $69,489.92 + $69,408.06

= $138,897.98 Or $138,898

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