1. A $1000 bond with a coupon rate of 6% is selling at par value, what is market required rate of return?
2. A $1000 bond makes annual payments of $60. If it offers a current yield of 6%, what is the price of the bond?
3. What is the price of a perpetuity that pays $5 annually and the required rate of return is 4%?
4. What is the price of a perpetuity that pays $50 annually and the required rate of return is 6%?
5. What is the price of a perpetuity that pays $17.50 semi-annually and the required rate of return is6%?
6. How long will it take to double your money if the rate of interest is 4%, 7%, 12% ?
7. ABC Start-up wants to fund the purchase of a new manufacturing plant that will cost $15,000,000 by selling zero coupon bonds that accrue interest of 4% per year. If ABC sells bonds that promise to pay $1000 on the date of maturity (10 years), how many bonds must ABC issue? (Hint this is a breakeven analysis and the solution is not to divide $15,000,000 with $1000) Show work