GIVEN:

FUTURE VALUE
COUPON RATE
INTEREST RATE
PERIOD (YEARS)

TO FIND:

COUPON AMOUNT
PRESENT VALUE

SOLUTION:

COUPON AMOUNT
PRESENT VALUE

Calculation of Present value

Facevalue
Coupon rate
Period (years)
Rate of return
Coupon Amount

1000
10%
12.25%
8

100
492.4547463

1000
12%
8
14%
120

Year

Coupon amt
1
2
3
4
5
6
7
8

120
120
120
120
120
120
120
120

Present value

Discounted factor Present value

0.877
105.26
0.769
92.34
0.675
81.00
0.592
71.05
0.519
62.32
0.456
54.67
0.400
47.96
0.351
42.07
556.66

907.22

Calculation of Present value

Facevalue
Coupon rate
Period (years)
Rate of return
Coupon Amount

100
12%
5
15%
12

Year

Coupon amt
1
2
3

Discounted factor Present value

12
0.870
10.43
12
0.756
9.07
12
0.658
7.89

4
5

12
12

Present value

0.572
0.497

6.86
5.97
40.23

89.94

Calculation of Present Value

Facevalue
Coupon rate
Period (years)
5( semiannually)
Rate of return
i.e.rate of return
Coupon Amount
Year

100
12%
15%
8%
6

Coupon amt
1
2
3
4
5
6
7
8
9
10

6
6
6
6
6
6
6
6
6
6

Price of Bond

87.43

Calculation of rate of return

Facevalue
coupon rate
period (years)
present value
coupon amt
Assume rate of return

1000
14%
5
1050
140
12%

Year

Coupon amt
1
2

Discounted factor Present value

0.930
5.58
0.865
5.19
0.805
4.83
0.749
4.49
0.697
4.18
0.648
3.89
0.603
3.62
0.561
3.36
0.143
0.86
0.485
2.91
6.485
38.91

Discounted factor Present value

140
0.893
125.00
140
0.797
111.61

3
4
5

140
140
140

Price of Bond

1072.10

Rate of return

0.1260

Yield to Maturity

0.1268

0.712
0.636
0.567

99.65
88.97
79.44
504.67

GIVEN:

FUTURE VALUE
COUPON RATE
PERIOD (YEARS)
PRESENT VALUE
SELLING PRICE

1000
10%
1
1000
1200

GIVEN:

TO FIND:
SOLN:-

TO FIND:

INTEREST RATE

SOLN:-

COUPON AMOUNT
RATE

100
30%

Assume rate of return

Year

13%
Coupon amt
Discounted factor Present value
1
140
0.885
123.89
2
140
0.783
109.64

3
4
5

Price of Bond

140
140
140

1035.17

0.693
0.613
0.543

97.03
85.86
75.99
492.41

FUTURE VALUE
MARKET VALUE

1000
960

YIELD TO MATURITY
YIELD TO MATURITY

4%

esent value

calculation of present value

Facevalue
Coupon rate
Period (years)
Rate of return
Coupon Amount

1000
12%
8
14%
120

Year
1
2
3
4
5
6
7
8

Present value

907.22

Calculation of Present value

Facevalue
Coupon Rate
Period (years)
Rate of return
Coupon Amount

100
12%
5
15%
12

Year

Coupon amt
1
2
3
4
5

Present value

Calculation of Present value

Facevalue
Coupon Rate
Period (years)

Coupon amt
Discounted factor Present value
120
0.877
105.26
120
0.769
92.34
120
0.675
81.00
120
0.592
71.05
120
0.519
62.32
120
0.456
54.67
120
0.400
47.96
120
0.351
42.07
556.66

12
12
12
12
12

89.94

100
12%
5( semiannually)

Discounted factor Present value

0.870
10.43
0.756
9.07
0.658
7.89
0.572
6.86
0.497
5.97
40.23

Rate of return
i.e.rate of return
Coupon Amount

15%
8%
6

Year

Coupon amt
1
2
3
4
5
6
7
8
9
10

6
6
6
6
6
6
6
6
6
6

Price of Bond

87.43

Calculation of rate of return

Facevalue
coupon rate
period (years)
present value
coupon amt
Assume rate of return

1000
14%
5
1050
140
12%

Year
1
2
3
4
5

Discounted factor Present value

0.930
5.58
0.865
5.19
0.805
4.83
0.749
4.49
0.697
4.18
0.648
3.89
0.603
3.62
0.561
3.36
0.143
0.86
0.485
2.91
6.485
38.91

Coupon amt
Discounted factor Present value
140
0.893
125.00
140
0.797
111.61
140
0.712
99.65
140
0.636
88.97
140
0.567
79.44
504.67

Price of Bond

1072.10

Rate of return

0.1260

Yield to Maturity

0.1268

Assume rate of return

13%

Year
1
2
3
4
5

Price of Bond

Coupon amt Discounted factor Present value

140
0.885
123.89
140
0.783
109.64
140
0.693
97.03
140
0.613
85.86
140
0.543
75.99
492.41
1035.17