Seven years ago, Goodwynn & Wolf Incorporated sold a 20-year bond issue with a 14% annual coupon rate and a 9% call premium. Today, G&W called the bonds. The bonds originally were sold at their face value of $1,000. Compute the realized rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price.

Answers

Answer 1

Answer:

14.82%

Explanation:

initial investment = $1,000

annual coupon = $140 (7 coupons received)

selling price = $1,090

the easiest way to determine the realized rate of return is to use a financial calculator or excel spreadsheet, and calculate the IRR: 14.82%

the cash flows are:

-10001401401401401401401230


Related Questions

According to the video, what are some qualities Petroleum Engineers need? Check all that apply.

willingness to travel
confidence
public-speaking skills
willingness to work night shifts
problem-solving skills
patience

Answers

Answer:

156

Explanation:

The video explained the qualities that Petroleum Engineers needs which includes:

willingness to travelproblem-solving skillspatience

Who are the Petroleum Engineers?

These are engineer that specializes in evaluation, development and production in the oil and gas sector.

This video in question stated that all Petroleum Engineers needs to be willingly to travel  have problem-solving skills and be patient.

Therefore, the Option 1, 5 & 6 is correct.

Read more about Petroleum Engineers

brainly.com/question/23053217

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