Problem 6-29 Bond Prices [LO 2] To calculate the number of years until maturity,
ID: 2615898 • Letter: P
Question
Problem 6-29 Bond Prices [LO 2] To calculate the number of years until maturity, assume that it is currently January 15, 2013. EST $ Vol (000's) 57,380 48,959 43,820 Company (Ticker) Last Price 94.363 Last Yield Maturity Jan 15, 2038 Jan 15, 2035 Jan 15, 2044 Coupon 7.200 Xenon, Inc. (XIC) Kenny Corp. (KCC)7.300 Williams Co. (WICO)?? 6.38 7.20 94.915 Requirement 1: What price would you expect to pay for the Kenny Corp. bond? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Price $1096.25 Requirement 2: What is the bond's current yield? (Round your answer to 2 decimal places (e.g., 32.16).) Current yieldExplanation / Answer
Requirement 1:
Assume the face value or future value to make it simple = $100
Using financial calculator BA II Plus - Input details:
#
I/Y = Rate =
6.38
FV = Future value =
-$100
N = Period =
22
PMT = Payment
-7.3
CPT > PV = Bond Value =
$110.72
Requirement 2:
Current yield = Coupon / Bond value
Current yield = 7.3 / 110.72
Current yield = 6.59%
Using financial calculator BA II Plus - Input details:
#
I/Y = Rate =
6.38
FV = Future value =
-$100
N = Period =
22
PMT = Payment
-7.3
CPT > PV = Bond Value =
$110.72