6. The Garcia Companys bonds have a face value of $1000 will mature in

QUESTION

6. The Garcia Companys bonds have a face value of $1000 will mature in ten years and carry a coupon rate of 16%. Assume interest payments are made semi-annually.a. Determine the present value of the bonds cash flows if the required rate of return is 16.64 percent.b. how would your answer change
Period Cash Flow DF @ 8.32% PV 1 80 0.923 73.86 2 80 0.852 68.18 3 80 0.787 62.95 4 80 0.726 58.11 5 80 0.671 53.65 6 80 0.619 49.53 7 80 0.572 45.72 8 80 0.528 42.21 9 80 0.487 38.97 10 80 0.450 35.98 11 80 0.415 33.21 12 80 0.383 30.66 13 80

4 28.31 14 80 0.327 26.13 15 80 0.302 24.12 16 80 0.278 22.27 17 80 0.257 20.56 18 80 0.237 18.98 19 80 0.219 17.52 20 1080 0.202 218.40 Present Value of Bond 969.32

ANSWER:

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