Exam 15: Bond Valuation and Sinking Funds

A $1000 bond,with interest at 8% payable semi-annually on January 1 and July 1,was purchased on October 8 at 104 plus accrued interest.What is the purchase payment for the bond?

A $100 000 bond bearing interest at 8% payable semi-annually is bought five years before maturity to yield 6% compounded annually.If the bond is redeemable at par,what is the purchase price?

A $100 000,8% bond with semi-annual coupons redeemable at par on April 25,2018,was purchased on June 25,2009,at 94.125.What was the approximate yield rate?

A $25 000,6% bond redeemable at par is purchased 11 years before maturity to yield 6.9% compounded semi-annually.If the bond interest is payable semi-annually,what is the purchase price of the bond?

The Cochrane Board of Education financed the acquisition of a new school site through a $400 000 long-term promissory note due in 17 years.Interest on the promissory note is 7.25% compounded semi-annually and is payable at the end of every six months.To provide for the redemption of the note,the board agreed to make equal payments at the end of every six months into a sinking fund paying 5% compounded semi-annually. a)What is the semi-annual interest payment? b)What is the size of the semi-annual payment into the sinking fund? c)What is the annual cost of the debt? d)Compute the book value of the debt after 3 years. e)Compute the increase in the sinking fund in the 37^th payment interval. f)Construct a partial sinking fund schedule showing details,including the book value of the debt,for the first three years,the last three years,and totals.

A $200 000.00,6% bond with semi-annual coupons is redeemable at par.What is the purchase price of the bond six years before maturity to yield 8% compounded semi-annually?

To redeem a $100 000.00 promissory note due in 12 years,Flinstone Inc.has set up a sinking fund earning 7.25% compounded semi-annually.Equal deposits are made at the beginning of every six months. a)What is the size of the semi-annual deposits? b)How much of the maturity value of the fund is deposits? c)How much is interest?

Nick buys a $25 000,5.4% bond with quarterly interest coupons,3 years before maturity,to yield 3.5% compounded quarterly.Construct a schedule of amortization of premium.

A $50 000 bond bearing interest at 6.5% bond payable semi-annually matures in 10 years.If it is bought to yield 5.7% compounded semi-annually,what is the purchase price of the bond?

A $125 000 bond,redeemable at par in three years with 7.5% coupons payable quarterly,is bought to yield 6% compounded quarterly. (i)Compute the premium or discount and the purchase price. (ii)Construct a schedule for amortization of premium.

What is the amount of premium/discount amortized or accumulated in the first payment interval for a bond that has a face value of $6000 and it sold for $5700? The coupon rate is 9% compounded semi-annually and the market rate is 10.1% compounded semi-annually.

OPG is required to create a sinking fund of $8.1 billion 80 years from the start of the plant by making equal deposits at the end of every month throughout the 50 years life of the Pickering plant.If the interest is compounded 7.2% monthly,what is the size of the monthly deposit into the fund?

What is the total increase in the 71^st monthly deposit interval of a sinking fund that is for 14 years and the sinking fund earn 4.8% compounded monthly? The original principal was $250000.

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?

Sepaba Construction made equal payments at the end of every six months into a sinking fund for 15 years.If the fund had a balance of $1 000 000.00 after 15 years and interest is 6% compounded semi-annually,what was the accumulated balance in the fund after 10 years?

Nick buys a $25 000,5.4% bond with quarterly interest coupons,3 years before maturity,to yield 7% compounded quarterly.Calculate the shortage of the actual interest received compared to the required interest based on the yield rate.

Phoenix Corporation is depositing equal sums of money at the beginning of every three months into a sinking fund to redeem a $165 000.00 promissory note due 11 years from now.Interest earned by the fund is 4.6% compounded quarterly. a)Determine the size of the quarterly payments into the sinking fund. b)Compute the balance in the fund after 6 years. c)Compute the increase in the fund during the 25th payment interval. d)Construct a partial sinking fund schedule showing details of the first three deposits,the last three deposits,and totals.

A $10 000,8.5% 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?

A $100 000,4% bond with semi-annual coupons is redeemable at 108.What is the purchase price to yield 5.5% compounded semi-annually seven years before maturity?

A $1000,6% bond redeemable at par with semi-annual coupons was purchased 10 years before maturity to yield 5% compounded semi-annually.The bond was sold 3 years later at 102.Calculate the gain or loss on the sale of the bond.