Exam 15: Bond Valuation and Sinking Funds

A $25 000, 7% bond with semi-annual coupons redeemable at par in twenty-two years is purchased to yield 6% compounded semi-annually. Determine the gain or loss if the bond is sold seven years after the date of purchase at 98.25.

Annual sinking fund payments made at the beginning of every year for four years earning 4.5% compounded annually amount to $25 000.00 at the end of four years. Construct a sinking fund schedule showing totals.

A $100 000 bond, redeemable at 110 in seven years with 6.75% coupons payable annually, is bought to yield 7.25% compounded annually. (i) Determine the discount and the purchase price. (ii) Construct a schedule of accumulation of discount.

What is the amount of premium/discount amortized or accumulated for the second payment interval of a $1500 bond that sold for $1627.32? The bond rate is 6.95% compounded semi-annually and the yield rate is 6% compounded semi-annually.

What is the size of the sinking fund deposit for a debt that has an original principal of $40 000 over 12 years? The deposits are quarterly and the interest rate on the sinking fund is 4.21% compounded annually.

Find the gain or loss on the sale without constructing a bond schedule for six $5000, 9.5% bonds with interest payable semi-annually redeemable at par bought twenty-one years before maturity to yield 10.5% compounded semi-annually. The bonds were sold three years later at 103.625.

A $5000 bond that pays 6% semi-annually is redeemable at par in 14 years. Calculate the purchase price if it is sold to yield 8% compounded semi-annually.

A $5000, 6.5% bond with semi-annual coupons redeemable at 108 is bought two years before maturity to yield 6% compounded semi-annually. What is the purchase price?

What is the quoted price of a bond that has 4.5 years until maturity? The face value of the bond is $5000 and it has a coupon rate of 8.1% compounded semi-annually and a yield rate of 8.6% compounded semi-annually.

A $100 000, 7.5% bond with semi-annual coupons redeemable at 106 is bought three years before maturity to yield 8% compounded semi-annually. What is the purchase price?

A $100 000, 6.0% bond with semi-annual coupons redeemable at par is bought 17.5 years before maturity at 74.25. What was the approximate yield rate?

The Town of Snow Lake issued debentures worth $420 000.00 maturing in 15 years to finance construction of recreational facilities. To redeem the debentures, the town council decided to make equal deposits into a sinking fund at the beginning of every three months. Interest earned by the sinking fund is 6.66% compounded quarterly. a) What is the size of the quarterly payment into the sinking fund? b) What is the balance in the fund after six years? c) How much interest is earned by the fund in the 25th payment interval? d) By how much will the fund increase in the 43rd payment interval? e) Prepare a partial sinking fund schedule showing details of the first three payments, the last three payments, and totals.

Bonds in denominations of $100 000 redeemable at 104 are offered for sale. If the bonds mature in ten years and six months and the coupon rate is 5.5% payable quarterly, what is the market price of the bonds to yield 7.2% compounded quarterly?

A $250 000, 6.5% bond with semi-annual coupons redeemable at par is bought 17.5 years before maturity at 78.25. What was the approximate yield rate?

What is the annualized cost of the debt for a sinking fund that has semi-annual deposits and it is set up to pay off a debt of $20000 over a period of 5 years? The sinking fund earns 4.6% compounded annually and the loan rate on the debt is 9.2% compounded quarterly.

Find the gain or loss on the sale without constructing a bond schedule for a $50 000, 6% bond with semi-annual coupons redeemable at par purchased twelve years before maturity to yield 10% compounded semi-annually. The bond was sold five years later at 99.375.

What is the amount of premium/discount for a bond that has 4 years till it matures? The face value of the bond is $100 000 and it has a bond rate of 6.4% compounded semi-annually. The bond is sold to yield 7.4% compounded semi-annually.

A $200 000 bond is redeemable at 108 in 14 years. If interest on the bond is 5.5% payable semi-annually, what is the purchase price to yield 4% compounded semi-annually?

A $100 000 bond is redeemable at 105 in 20 years. If interest on the bond is 5% payable semi-annually, what is the purchase price to yield 6% compounded semi-annually?

A $10000, 8.5% bond with semi-annual coupons redeemable at par on March 1, 2005, was purchased on September 22, 1997, to yield 10.06% compounded semi-annually. What was the purchase price?