ALL WORK MUST BE SHOWN 1. A $1,000 par-value bond with 5 years of maturity pays a 7% coupon rate, paid annually. What is the value of the bond if your required rate of return is 5%? 2.A $1,000...

Corporate Finance
1. A $1,000 par-value bond with 5 years of maturity pays a 7% coupon rate, paid annually. What is the value of the bond if your required rate of return is 5%?
Coupon Price = $1000 x 7% = $70
Price = $70[(1-1/1.055)/ 0.05] + 1000/ 1.055 = $303.06 + $783.53 = $1086.59
FV = $1000
PMT = $70
I/Y = 5%
CPT PV = 1086.59
2. A $1,000 par-value bond with 5 years of maturity pays a 5% coupon rate, paid semi-annually. What is the value of the bond if your required rate of return is 5%?
Coupon Price = $1000 x 5%/2 = $25
Price = $25[(1-1/1.02510)/ 0.025] + 1000/ 1.02510 = $218.80 + $781.20 = $1000
FV = $1000
PMT = $25
I/Y = 5%/2 = 2.50%
CPT PV = 1000
3. A $1,000 par-value bond with 5 years of maturity pays a 5%coupon rate, paid semi-annually. What is the value of the bond if your required rate of return is 8%?
Coupon Price = $1000 x 5%/2 = $25
Price = $25[(1-1/1.0410)/ 0.04] + 1000/ 1.0410 = $202.77+ $675.56 = $878.34
FV = $1000
PMT = $25
I/Y = 8%/2 = 4%
CPT PV = 878.34
4. A $1,000 par-value bond with 5 years of maturity pays a 5%coupon rate, paid semi-annually. What is the value of the bond if your required rate of return is 2%?
Coupon Price = $1000 x 5%/2 = $25
Price = $25[(1-1/1.0110)/ 0.01] + 1000/ 1.0110 = $236.78+ $905.29 = $1142.07
FV = $1000
PMT = $25
I/Y = 2%/2 = 1%
CPT PV = 1142.07
5. AAA, Inc. currently has an issue of bonds outstanding that will mature in 20 years. The bonds have a face value of $1,000 and a stated annual coupon rate of 20.0% with annual coupon payments. The bond is currently selling for $890. The bonds may be called in 6 years for 120.0% of the par value ($1200). What is the...