A bond is purchased on September 17, 1997, for $28,557.25 with 14 years until maturity. The 6% coupon pays $967.50 every six months.
Calculate the yield to maturity. 15. A $300,000 face value bond carrying a 4% coupon is issued with four years until maturity. A sinking fund with semi-annual payments is set up and is expected to earn 6.35% compounded semi-annually. Construct a complete sinking fund schedule.
Calculate the annual cost of the debt. What is the book value of the debt after the fifth payment? 16. A $500,000 face value bond makes semi-annual payments of $15,900 and will mature on January 2, 2014. The bond is purchased on July 14, 1997, when posted market rates are 7.77%. Calculate the market price, accrued interest, cash price, and the amount of the bond premium or discount.
