Exam 15: Bond Valuation and Sinking Funds

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.

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.

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 $10 000.00,5% bond with semi-annual coupons redeemable at 105 in 23 years is purchased at 102.5.What is the approximate yield rate?

A $50 000,4% bond with semi-annual coupons is purchased three years before maturity.Calculate the discount or premium if the bond is sold to yield 6% compounded semi-annually.

A $10 000 bond bearing interest at 6% payable semi-annually redeemable at par on March 1,2002,was purchased on September 30,1996,to yield 5% compounded semi-annually.Determine the purchase price.

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.

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 manufacturing company is planning a $600 000 expansion 6 years from now.By that time the company intends to accumulate 75% of the cost of the expansion by making payments into a sinking fund at the beginning of each of the next six years.Interest paid by the fund is 7% compounded annually. a)Calculate the size of annual payment into the fund. b)Calculate the total amount deposited into the fund. c)Calculate the amount of interest.

Clarington issued 15 year bonds in the amount of $500 000.Interest on the bonds is 2.2% payable annually.What is the issue price of the bonds,if the bonds are sold to yield 2.8% compounded quarterly?

A $100 000.00,7% bond with semi-annual coupons redeemable at 105 on November 1,2001,is purchased on July 23,1999,to yield 8% compounded semi-annually.Determine the quoted price.

A $50 000,6% bond with semi-annual coupons redeemable at par on April 25,2018,was purchased on June 25,2009,at 94.378.What was the approximate yield rate?

What is the purchase price of a bond that has 4 years and 6 months until it matures? The face value of the bond is $3000 and the coupon rate is 5.2% compounded semi-annually.The yield rate is 7.5% compounded semi-annually.

The Town of The Pas bought rescue equipment for $176 000.The financing agreement provides for annual interest payments and equal payments at the end of each year into a sinking fund for 13 years.After 13 years the proceeds of the sinking fund will be used to retire the principal.Interest on the debt is 6.5% compounded annually and interest earned by the sinking fund is 5.1% compounded annually. a)What is the annual interest payment? b)What is the size of the annual payment into the sinking fund? c)What is the total annual cost of the debt? d)What is the book value of the debt after 6 years? e)Construct a partial sinking fund schedule showing details,including the book value of the debt,for the last three years and totals.

Clarington issued 15 year bonds in the amount of $500 000.Interest on the bonds is 2.2% payable annually.What is the promised payment at the end of each year?

A $50 000.00,6% bond with semi-annual coupons redeemable at par in 14 years is purchased to yield 8% compounded semi-annually.What is the gain or loss if the bond is sold four years before maturity at 99.25?

A 4.5% annuity bond of $500 000 with interest payable quarterly is to be redeemable at par in seven years. a)What is the purchase price to yield 6% compounded quarterly? b)What is the book value after 6 years? c)What is the gain or loss if the bond is sold six years after the date of purchase at

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?

Cranberry Portage Credit Union borrowed $425 000.00 at 6% compounded semi-annually from League Central to build a sports complex.The loan agreement requires payment of interest at the end of every six months.In addition,the credit union is to make equal payments into a sinking fund so that the principal can be retired in total after 11 years.Interest earned by the fund is 4.14% compounded semi-annually. a)What is the semi-annual interest payment on the debt? b)What is the size of the semi-annual deposits into the sinking fund? c)What is the total annual cost of the debt? d)What is the interest earned by the fund in the 18^th payment interval? e)What is the book value of the debt after 6 years? f)Prepare a partial sinking fund schedule showing details,including the book value of the debt,for the first three payments,the last three payments,and totals.

University of Toronto wants to expand its Medical Arts and Research centre by making equal deposits every six months for 10 years into a sinking fund of $30 million.Interest is locked at 5.6% compounded semi-annually.Construct a sinking fund schedule