On January 1, 2019, XYZ Company issued $3,000,000 of 7-year, 5% coupon bonds…. 1 answer below »

Week 4 “In-Class Problems”

Please complete these problems using formulas, Microsoft Excel, a financial/basic calculator, or a

combination of all three. If you choose to complete your answers in Excel, you can submit the

spreadsheet. If you write it on paper, you can take a picture and upload it into eLearning.

Problem #1

On January 1, 2019, XYZ Company issued $3,000,000 of 7-year, 5% coupon bonds. The yield to maturity

is 10%, and the bonds pay interest semi-annually. What is the selling price of the bonds?

Problem #2

On January 1, 2019, VVV Company issued $2,200,000 of 12-year, 4% coupon bonds. The yield to

maturity is 2%, and the bonds pay interest semi-annually. What is the selling price of the bonds?

Problem #3

On January 1, 2019, YTR Company issued $1,700,000 of 15-year, 8% coupon bonds. The bonds pay

interest semi-annually and they sold for $2,040,000. The bonds can be called after 5 years at 101.

Compute the YTM and the YTC. Would the issuing firm call the bonds in prior to maturity?

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