# Finance Bond Valuation : Calculation of value

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```					              Sub: Finance                                                                  Topic: Bond Valuation

Question:
Calculation of value of bond and intrinsic value
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1) Ciza Inc. raised \$100 million by floating corporate bonds. Each bond paid a coupon of 7 percent with a
Par Value of \$1000.00 and will mature in 4 years.

Required

a. Determine the current market value of the bond if your required rate of return is 14 percent.

b. Holding everything constant and assuming that the coupon is paid on a semiannual basis, what is

c. Now assume annual coupon payments but 20 years remaining to maturity, what is the value of the

2) Zota Inc., has a bond issue outstanding with 8 years remaining to maturity, a coupon rate of 10
percent with interest paid annually, and a Par Value of \$1000.

Required

If the current market price of the bond is \$814.45, what is the bond’s yield to maturity? Discuss your

3) Hilo Inc. of Chandler, Arizona has floated some zero coupon bonds to finance its capital expenditures.
The Par Value of each bond is \$1000.

Required

a. Assuming a market price of \$300 with a maturity of 30 years, determine and discuss the bond’s
yield-to-maturity.

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Description: Calculation of EBIT-EPS Indifference Point. : Emco Products has a present capital structure consisting only of common stock (10 million shares).
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