.

value:

1.00

points

Problem 10-2 Bond

value [LO3]

Applied Software has $1,000 par

value bonds outstanding at 16 percent interest. The bonds will mature in 20

years. Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D.

Compute the current price of the

bonds if the present yield to maturity is(Round “PV Factor” to 3 decimal places, intermediate and

final answers to2

decimal places. Omit the “$” sign in your response):

Price

of the

bond

(a) 8 percent

$

(b) 14 percent

$

(c) 11 percent

$

2.

value:

1.00

points

Problem 10-4 Bond

value [LO3]

Barrys Steroids Company has

$1,000 par value bonds outstanding at 14 percent interest. The bonds will

mature in 40 years.

If the percent yield to maturity

is 12 percent, what percent of the total bond value does the repayment of

principal represent? Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D.(Round intermediate calculations to 2 decimal

places, “PV Factor” and final answer to 3 decimal places. Omit the

“%” sign in your response.)

Principal repayment

%

3.

value:

1.00

points

Problem 10-5 Bond

value [LO3]

Essex Biochemical Co. has a $1,000

par value bond outstanding that pays 14 percent annual interest. The current

yield to maturity on such bonds in the market is 9 percent. Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D.

Compute the price of the bonds for

these maturity dates(Round “PV

Factor” to 3 decimal places, intermediate and final answers to 2 decimal

places. Omit the “$” sign in your response):

Price

of the

bond

(a) 40 years

$

(b) 17 years

$

(c) 5 years

$

4.

value:

2.00

points

Problem 10-8 Interest

rate effect [LO3]

Refer to.mhhe.com/connect/0073530727/Images/Table%2010-1.JPG”>Table

10-1, which is based on bonds paying 10 percent interest for 20

years. Assume interest rates in the market (yield to maturity) go from 10

percent to 9 percent.

(a)

What was the bond price at 10

percent?(Round “PV Factor” to 3 decimal

places, intermediate calculations and final answers to 2 decimal places. Omit

the “$” sign in your response.)

Bond price

$

(b)

What is the bond price at 9

percent?(Round “PV Factor” to 3 decimal

places, intermediate calculations and final answers to 2 decimal places. Omit

the “$” sign in your response.)

Bond price

$

(c)

What would be your percentage

return on the investment if you bought when rates were 10 percent and sold

when rates were 9 percent?(Round “PV Factor” to 3 decimal

places, intermediate calculations and final answers to 2 decimal places.

Enter the value as positive value. Omit the “%” sign in your

response.)

(Click to select)

Profit

Loss

on investment

%

5.

value:

1.00

points

Problem 10-11 Effect

of maturity on bond price [LO3]

Refer to.mhhe.com/connect/0073530727/Images/Table%2010-2.JPG”>Table

10-2

(a)

Assume the interest rate in the

market (yield to maturity) goes down to 8 percent for the 10 percent bonds.

Using column 2, indicate what the bond price will be with a 5-year, a

25-year, and a 30-year time period.(Round

“PV Factor” to 3 decimal places, intermediate calculations and

final answers to 2 decimal places. Omit the “$” sign in your

response.)

Maturity

Bond

price

5 Years

$

25 years

30 years

(b)

Assume the interest rate in the

market (yield to maturity) goes up to 12 percent for the 10 percent

bonds. Using column 3, indicate what the bond price will be with a 5-year, a

25-year, and a 30-year period.(Round

“PV Factor” to 3 decimal places, intermediate calculations and

final answers to 2 decimal places. Omit the “$” sign in your

response.)

Maturity

Bond

price

5 Years

$

25 years

30 years

(c)

Assume the interest rate in the

market (yield to maturity) goes down to 8 percent for the 10 percent bonds.

If interest rates in the market are going down, which bond would you choose

to own?

Shortest-term bond

Longest-term bond

(d)

Assume the interest rate in the

market (yield to maturity) goes up to 12 percent for the 10 percent bonds. If

interest rates in the market are going up, which bond would you choose to

own?

Longest-term bond

Shortest-term bond

6.

value:

1.00

points

Problem 10-13 Effect

of yield to maturity on bond price [LO3]

Tom Cruise Lines, Inc., issued

bonds five years ago at $1,000 per bond. These bonds had a 30-year life when

issued and the annual interest payment was then 15 percent. This return was

in line with the required returns by bondholders at that point as described

below:

Real rate of return

5

%

Inflation premium

6

Risk premium

4

Total

return

15

%

Assume that five years later the

inflation premium is only 2 percent and is appropriately reflected in the

required return (or yield to maturity) of the bonds. The bonds have 25 years

remaining until maturity.

Compute the new price of the bond.

Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D.(Round

“PV Factor” to 3 decimal places, intermediate and final answer

to 2 decimal places. Omit the “$” sign in your response.)

New price

$

7.

value:

2.00

points

Problem 10-14

Analyzing bond price changes [LO3]

(a)

Find the present value of 3

percent $1,000 (or $30) for 25 years at 12 percent. The $30 is assumed to

be an annual payment. Use.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D. (Round “PV Factor” to

3 decimal places, intermediate and final answerto 2 decimal places. Omit the “$” sign

in your response.)

Present value

$

(b)

Add the answer obtained in partato 1,000.(Round “PV Factor” to 3 decimal

places, intermediate and final answerto 2 decimal places. Omit the “$” sign in your

response.)

Present value

$

8.

value:

2.00

points

Problem 10-17 Deep

discount bonds [LO3]

Lance Whittingham IV specializes

in buying deep discount bonds. These represent bonds that are trading at well

below par value. He has his eye on a bond issued by the Leisure Time

Corporation. The $1,000 par value bond pays 7 percent annual interest and has

16 years remaining to maturity. The current yield to maturity on similar

bonds is 12 percent.

(a)

What is the current price of the

bonds? Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D. (Round “PV Factor” to

3 decimal places, intermediate and final answers to 2 decimal places. Omit

the “$” sign in your response.)

Current price

$

(b)

By what percent will the price of

the bonds increase between now and maturity?(Round

“PV Factor” to 3 decimal places, intermediate and final answers to

2 decimal places. Omit the “%” sign in your response.)

Price increases by

%

9.

value:

1.00

points

Problem 10-19

Approximate yield to maturity [LO3]

Bonds issued by the Tyler Food

Corporation have a par value of $1,000, are selling for $1,570, and have 20

years remaining to maturity. The annual interest payment is 14.5 percent

($145).

Compute the approximate yield to

maturity.(Do not round intermediate calculations. Round

your answer to 2 decimal places. Omit the “%” sign in your

response.)

Approximate yield to

maturity

%

10.

value:

2.00

points

Problem 10-22 Bond

value-semiannual analysis [LO3]

You are called in as a financial

analyst to appraise the bonds of Olsens Clothing Stores. The $1,000 par

value bonds have a quoted annual interest rate of 8 percent, which is paid

semiannually. The yield to maturity on the bonds is 10 percent annual interest.

There are 15 years to maturity. Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D.

(a)

Compute the price of the bonds

based on semiannual interest payments.(Round

“PV Factor” to 3 decimal places, intermediate and final answer to 2

decimal places. Omit the “$” sign in your response.)

Price of the bonds

$

(b)

With 10 years to maturity, if

yield to maturity goes down substantially to 8 percent, what will be the new

price of the bonds?(Round “PV Factor” to 3 decimal

places, intermediate and final answer to 2 decimal places. Omit the

“$” sign in your response.)

New price

$

1

Rest are in the doc

.value:

1.00

points Problem 10-2 Bond

value [LO3]Applied Software has $1,000 par

value bonds outstanding at 16 percent interest. The bonds will mature in 20

years. Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D. Compute the current price of the

bonds if the present yield to maturity is(Round “PV Factor” to 3 decimal places, intermediate and

final answers to2

decimal places. Omit the “$” sign in your response): Price

of the

bond (a) 8 percent$ (b) 14 percent$ (c) 11 percent$ 2.value:

1.00

points Problem 10-4 Bond

value [LO3]Barrys Steroids Company has

$1,000 par value bonds outstanding at 14 percent interest. The bonds will

mature in 40 years.If the percent yield to maturity

is 12 percent, what percent of the total bond value does the repayment of

principal represent? Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D.(Round intermediate calculations to 2 decimal

places, “PV Factor” and final answer to 3 decimal places. Omit the

“%” sign in your response.) Principal repayment% 3.value:

1.00

points Problem 10-5 Bond

value [LO3]Essex Biochemical Co. has a $1,000

par value bond outstanding that pays 14 percent annual interest. The current

yield to maturity on such bonds in the market is 9 percent. Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D. Compute the price of the bonds for

these maturity dates(Round “PV

Factor” to 3 decimal places, intermediate and final answers to 2 decimal

places. Omit the “$” sign in your response): Price

of the

bond (a) 40 years$ (b) 17 years$ (c) 5 years$ 4.value:

2.00

points Problem 10-8 Interest

rate effect [LO3]Refer to.mhhe.com/connect/0073530727/Images/Table%2010-1.JPG”>Table

10-1, which is based on bonds paying 10 percent interest for 20

years. Assume interest rates in the market (yield to maturity) go from 10

percent to 9 percent. (a)What was the bond price at 10

percent?(Round “PV Factor” to 3 decimal

places, intermediate calculations and final answers to 2 decimal places. Omit

the “$” sign in your response.) Bond price$ (b)What is the bond price at 9

percent?(Round “PV Factor” to 3 decimal

places, intermediate calculations and final answers to 2 decimal places. Omit

the “$” sign in your response.) Bond price$ (c)What would be your percentage

return on the investment if you bought when rates were 10 percent and sold

when rates were 9 percent?(Round “PV Factor” to 3 decimal

places, intermediate calculations and final answers to 2 decimal places.

Enter the value as positive value. Omit the “%” sign in your

response.)

(Click to select)

Profit

Loss

on investment% 5.value:

1.00

points Problem 10-11 Effect

of maturity on bond price [LO3]Refer to.mhhe.com/connect/0073530727/Images/Table%2010-2.JPG”>Table

10-2(a)Assume the interest rate in the

market (yield to maturity) goes down to 8 percent for the 10 percent bonds.

Using column 2, indicate what the bond price will be with a 5-year, a

25-year, and a 30-year time period.(Round

“PV Factor” to 3 decimal places, intermediate calculations and

final answers to 2 decimal places. Omit the “$” sign in your

response.) MaturityBond

price 5 Years$ 25 years 30 years (b)Assume the interest rate in the

market (yield to maturity) goes up to 12 percent for the 10 percent

bonds. Using column 3, indicate what the bond price will be with a 5-year, a

25-year, and a 30-year period.(Round

“PV Factor” to 3 decimal places, intermediate calculations and

final answers to 2 decimal places. Omit the “$” sign in your

response.) MaturityBond

price 5 Years$ 25 years 30 years (c)Assume the interest rate in the

market (yield to maturity) goes down to 8 percent for the 10 percent bonds.

If interest rates in the market are going down, which bond would you choose

to own? Shortest-term bondLongest-term bond (d)Assume the interest rate in the

market (yield to maturity) goes up to 12 percent for the 10 percent bonds. If

interest rates in the market are going up, which bond would you choose to

own? Longest-term bondShortest-term bond6.value:

1.00

points Problem 10-13 Effect

of yield to maturity on bond price [LO3]Tom Cruise Lines, Inc., issued

bonds five years ago at $1,000 per bond. These bonds had a 30-year life when

issued and the annual interest payment was then 15 percent. This return was

in line with the required returns by bondholders at that point as described

below: Real rate of return5% Inflation premium6 Risk premium4 Total

return15% Assume that five years later the

inflation premium is only 2 percent and is appropriately reflected in the

required return (or yield to maturity) of the bonds. The bonds have 25 years

remaining until maturity. Compute the new price of the bond.

Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D.(Round

“PV Factor” to 3 decimal places, intermediate and final answer

to 2 decimal places. Omit the “$” sign in your response.) New price$ 7.value:

2.00

points Problem 10-14

Analyzing bond price changes [LO3](a)Find the present value of 3

percent $1,000 (or $30) for 25 years at 12 percent. The $30 is assumed to

be an annual payment. Use.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D. (Round “PV Factor” to

3 decimal places, intermediate and final answerto 2 decimal places. Omit the “$” sign

in your response.) Present value$ (b)Add the answer obtained in partato 1,000.(Round “PV Factor” to 3 decimal

places, intermediate and final answerto 2 decimal places. Omit the “$” sign in your

response.) Present value$ 8.value:

2.00

points Problem 10-17 Deep

discount bonds [LO3]Lance Whittingham IV specializes

in buying deep discount bonds. These represent bonds that are trading at well

below par value. He has his eye on a bond issued by the Leisure Time

Corporation. The $1,000 par value bond pays 7 percent annual interest and has

16 years remaining to maturity. The current yield to maturity on similar

bonds is 12 percent. (a)What is the current price of the

bonds? Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D. (Round “PV Factor” to

3 decimal places, intermediate and final answers to 2 decimal places. Omit

the “$” sign in your response.) Current price$ (b)By what percent will the price of

the bonds increase between now and maturity?(Round

“PV Factor” to 3 decimal places, intermediate and final answers to

2 decimal places. Omit the “%” sign in your response.) Price increases by% 9.value:

1.00

points Problem 10-19

Approximate yield to maturity [LO3]Bonds issued by the Tyler Food

Corporation have a par value of $1,000, are selling for $1,570, and have 20

years remaining to maturity. The annual interest payment is 14.5 percent

($145). Compute the approximate yield to

maturity.(Do not round intermediate calculations. Round

your answer to 2 decimal places. Omit the “%” sign in your

response.) Approximate yield to

maturity%10.value:

2.00

points Problem 10-22 Bond

value-semiannual analysis [LO3]You are called in as a financial

analyst to appraise the bonds of Olsens Clothing Stores. The $1,000 par

value bonds have a quoted annual interest rate of 8 percent, which is paid

semiannually. The yield to maturity on the bonds is 10 percent annual interest.

There are 15 years to maturity. Use.mhhe.com/connect/0073530727/Images/Appendix_B.jpg”>Appendix

Band.mhhe.com/connect/0073530727/Images/Appendix_D.JPG”>Appendix

D. (a)Compute the price of the bonds

based on semiannual interest payments.(Round

“PV Factor” to 3 decimal places, intermediate and final answer to 2

decimal places. Omit the “$” sign in your response.) Price of the bonds$ (b)With 10 years to maturity, if

yield to maturity goes down substantially to 8 percent, what will be the new

price of the bonds?(Round “PV Factor” to 3 decimal

places, intermediate and final answer to 2 decimal places. Omit the

“$” sign in your response.) New price$1Rest are in the doc