Answer 9 questions in the file

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Business Finance

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Answer the questions by showing all the work. Nine Questions, some concepts and some calculations.

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FIN 3331 Extra homework
Note: You must show all your work.
1. The Carter Company's bonds mature in 10 years have a par value of $1,000 and an
annual coupon payment of $80. The market interest rate for the bonds is 9%. What is
the price of these bonds?
Answer:
Data:
N = 10
I/Yr = 9%
PMT = $80
FV = 1,000
PV?
Calculation:
Formula:
VB = Coupon [{1-1/(1 + iN}}/i] + FV/ (1 +i)N
= $80[{1-(1/(1+0.09)10)}/0.09]+$1,000/(1+0.09)10
= $80 * 6.4177 _ $422.41
= $513.34 +$422.41
= $935.82
So, the price of these bonds is $935.82
2. Highfield Inc's bonds currently sell for $1,275 and have a par value of $1,000. They
pay a $120 annual coupon and have a 20-year matu...


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