Please show work. 3. 12 years ago Marco Chip Inc. issued 30-year to maturity zer
ID: 2644598 • Letter: P
Question
Please show work.
3. 12 years ago Marco Chip Inc. issued 30-year to maturity zero-coupon bonds with a par value of $1,000. The bond has yield to maturity of 9.3% compounded semi-annually. What is the current price of the bond? Round the answer to two decimal places.
4. Tom is considering the purchase of Red Lobster Inc. bonds that were issued 4 years ago. When the bonds were originally sold, they had a 25-year maturity and a 6.54% coupon interest rate paid annually. The bond is currently selling for $1,178. What is the yield to maturity on the bonds if you purchased the bond today? Round the answer to two decimal places in percentage form
a)12.94%
Explanation / Answer
3) Price = 1000 / (1+.093/2)^36
= 194.71
Correct option:
a) $194.71
4) Using excel based formula:
=RATE(21,65.4,-1178,1000)
= 5.14%