Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannuall
ID: 2637394 • Letter: R
Question
Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature in 14 years, have a face value of $1,000, and a yield to maturity of 10%. What is the price of the bonds? Round your answer to the nearest cent.
Thatcher Corporation's bonds will mature in 13 years. The bonds have a face value of $1,000 and an 9.5% coupon rate, paid semiannually. The price of the bonds is $1,150. The bonds are callable in 5 years at a call price of $1,050. Round your answers to two decimal places.
What is their yield to maturity?
%
What is their yield to call?
%
Explanation / Answer
1. Interest for 6 month =(1000*.10)/2=$50
PV of Interest for 28 half year at YTM=$50*14.898
=$744.90
PV of Maturity=$1000*.255=$255
Current value of Bond=255+744.90= $999.90 (1000Approx)
2. YTM = [Interest+(CURRENT Price-RV)/Life]/(RV+Price/2)
$47.50+(150/26)/1075
=4.96%*2 =9.91 % p.a.