CHAPTER 5

Time Value of Money

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Intrinsic Value and the Cost of Debt

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02601_05_UNF02 Page 202

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02601_05_UNF03 Page 204

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 Figure 5-1 Finding the Value of
MicroDrive’s Bond (VB)

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02601_05_UNF04 Page 206

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02601_05_UNF05 Page 206

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Figure 5-2 Time Path of the Value of a 10% Coupon, $1,000
Par Value Bond When Interest Rates Are 5%, 10%, and 15%

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02601_05_UNF06 Page 211

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02601_05_UNF07 Page 212

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02601_05_UNF08 Page 213

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02601_05_UNF09 Page 213

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02601_05_UNF10 Page 219

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Figure 5-3 Value of Long- and Short-Term 10% Annual
Coupon Bonds at Different Market Interest Rates

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Table 5-1 Bond Ratings, Default Risk, and Yields

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 Figure 5-4 Bond Spreads

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02601_05_UNF11 Page 227

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Figure 5-5 U.S. Treasury Bond Interest
Rates on Different Dates

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