Finance Bond Valuation : Calculation of current price by ClassOf1

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Calculation of Profitability Index. : A project has an initial cost of $52,125, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project’s PI?

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									              Sub: Finance                                                                Topic: Bond Valuation



              Question:
              Calculation of current price of the bond.
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              DAH, Inc. has issued a 12% bond that is to mature in 9 years. The bond had a $1,000 par value and
              interest is due to be paid semi-annually. If your required rate of return is 10%, what price would you
              be willing to pay for the bond?

              Solution:
              Since the coupon payment is semiannual, so n = Years to Maturity * 2

               Particulars                                                                                        Amount

               Number of coupon payments (n)                                                                             18

      
								
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