# What is a Par value of a bond

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PV= 20,000
i = 0.03 (3%) n = 5
FV
= 20,000 (1 + 0.03) ^5= 23,185.48
Investment 2: He invests \$5,000 for 5 years compounded semi-annually at 2.5%
PV = 5,000
i= .025 / 2 (to make it semi-annual) n= 10 (6 month periods in 5 years)
FV
= 5,000 (1+0.0125) ^10= 5,661.35
Add Investment 1 and 2 together for a total FV = \$28,846.83. Round up to the answer choice below.a. \$28,847b. \$28,982c. \$28,750d. \$28,285e. \$28,800f. \$28,973Sanjay has made two investments. Use the compound interest formula to calculate the TOTAL future valueof these investments.(Seminar 2, Slide 18)FV = PV (1+i)^nInvestment 1: He invests \$10,000 for 5 years compounded annually at 11%.PV = 10,000 i = 0.11 (11%) n = 5
FV
= 10,000 (1 + 0.11) ^ 5= \$16,850.58
Investment 2: He invests \$3,000 for 5 years compounded semi-annually at 10.5%
PV = 3,000
i = 0.105 / 2 (to make it semi-annual) n = 10 (6 month periods in 5 years)
FV
= 3,000 (1+ 0.0525)^10= \$5004.29
Add Investment 1 and 2 together for a total FV = \$21,854.87.Round up to the answer choice below.a. \$21,855b. \$21,685c. \$21,905d. \$21,965e. \$21,790f. \$21,805Prakul has made two investments. Use the compound interest formula to calculate the TOTAL future valueof these investments.(Seminar 2, Slide 18)FV = PV (1+i)^nInvestment 1: He invests \$12,000 for 5 years compounded annually at 6%.
PV = 12,000
i = 0.06 (6%)
n = 5
FV
= 12,000 (1+0.06) ^ 5= \$16,058.71
Investment 2: He invests \$4,000 for 5 years compounded semi-annually at 5.5%
PV = 4,000
i = 0.055 / 2 (to make it semi-annual) n = 10 (6 month periods in 5 years)
FV
= 4,000 (1+0.0) ^ 10= \$5,246.60
Add Investment 1 and 2 together for a total FV = \$21,305.31Round to the answer choice below.g. \$21,305h. \$21,365i. \$21,255j. \$21,395k. \$21,415l. \$21,2254. NPV Calculation questions.Indira will receive three payments from the sale of her business over the next three months.Calculate the Net Present Value (NPV) of these payments. Assume that we are using a 365 day basis (365days in the year) for calculations. The interest rates applicable at the moment are 1mth 7% per annum,2mth 8% per annum, and 3mth 8.5% per annum.(Seminar 2, Slide 23, 24)PV = FV / (1+i)Payment 1 in 30 days is \$10,000.
FV = 10,000
i = (30/365)*0.07 = 0.00575…..
PV
= 10,000 / (1+0.00575….)= \$9,942.79
Payment in 60 days is 12,000.
FV = 12,000
i = (60/365)*0.08 = 0.01315….
PV
= 12,000 / (1+0.01315…)= \$11,844.24
Payment in 90 days is \$20,000.
FV = 20,000
i = (90/365)*0.085 = 0.02095….
PV
= 20,000 / (1+0.02095…)= \$19,589.42
Add the PV of the three payments together for a total PV = \$41,376.46Round to the answer choice below.Choose the correct present valued sum of the three payments.a. \$41,376b. \$41,462c. \$41,416d. \$41,325e. \$41,522f. \$41,422Amrita will receive three payments from the sale of her business over the next three months.Calculate the Present Value (PV) of these payments. Assume that we are using a 365 day basis (365 days inthe year) for calculations. The interest rates applicable at the moment are 1mth 7% per annum, 2mth 8%per annum, and 3mth 8.5% per annum.(Seminar 2, Slide 23, 24)PV = FV / (1+i)Payment 1 in 30 days is \$6,000.
FV = 6,000
i = (30/365)*0.07 = 0.00575…..
PV
= 6,000 / (1+0.00575….)= \$5,965.68
Payment in 60 days is 9,000.
FV = 9,000
i = (60/365)*0.08 = 0.01315….
PV
= 9,000 / (1+0.01315…)= \$8,883.18
Payment in 90 days is \$25,000.
FV = 25,000
i = (90/365)*0.085 = 0.02095….
PV
= 25,000 / (1+0.02095…)= \$24,486.78
Add the PV of the three payments together for a total PV = \$39,335.64Round to the answer choice below.Choose the correct present valued sum of the three payments.a. \$39,336b. \$39,462c. \$39,416d. \$39,305e. \$39,522f. \$39,422Latika will receive three payments from the sale of her business over the next three months.Calculate the Present Value (PV) of these payments. Assume that we are using a 365 day basis (365 days inthe year) for calculations. The interest rates applicable at the moment are 1mth 7% per annum, 2mth 8%per annum, and 3mth 8.5% per annum.(Seminar 2, Slide 23, 24)PV = FV / (1+i)Payment 1 in 30 days is \$10,000.
FV = 10,000
i = (30/365)*0.07 = 0.00575…..
PV
= 10,000 / (1+0.00575….)= \$9,942.79
Payment in 60 days is 12,000.
FV = 12,000
i = (60/365)*0.08 = 0.01315….
PV
= 12,000 / (1+0.01315…)= \$11,844.24
Payment in 90 days is \$18,000.
FV = 18,000
i = (90/365)*0.085 = 0.02095….
PV
= 18,000 / (1+0.02095…)= \$17,630.48
Add the PV of the three payments together for a total PV = \$39,417.51Round to the answer choice below.Choose the correct present valued sum of the three payments.a. \$39,418b. \$39,498c. \$39,511d. \$39,367e. \$39,542f. \$39,3995. Annuity Question.Raj is to receive an ordinary Annuity in the form of a pension for the next 18 years. It is for a fixed amountof \$3000 per year and the first payment will be made to him one year from now. If the current 18 yearinterest rate is 11% per annum, calculate the Present Value (PV) of this annuity and choose the correctanswer from the choices given.(Seminar 3, Slide 10, 11, 12, 13)PV = (CF/i) * [1- 1/(1+i)^n]CF = 3000 i = 0.11 (11%) n = 18
PV
= (3000/0.11) * [1 – 1/(1+0.11)^18]= \$23,104.85
Round to the answer choice below.a. \$23,105b. \$23,020c. \$25,175d. \$25,555e. \$31,475f. \$31,110Raul is to receive an ordinary Annuity in the form of a pension for the next 20 years. It is for a fixed amountof \$5000 per year and the first payment will be made to him one year from now. If the current 20 yearinterest rate is 5% per annum, calculate the Present Value (PV) of this annuity and choose the correctanswer from the choices given.(Seminar 3, Slide 10, 11, 12, 13)PV = (CF/i) * [1- 1/(1+i)^n]CF = 5000 i = 0.05 (5%) n = 20
PV
= (5000/0.05) * [1 – 1/(1+0.05)^20]= \$62,311.05
Round to the answer choice below.a. \$62,311b. \$62,562c. \$66,177d. \$66,594e. \$60,488f. \$60,690Preeti is to receive an ordinary Annuity in the form of a pension for the next 7 years. It is for a fixed amountof \$12,000 per year and the first payment will be made to her one year from now. If the current 7 yearinterest rate is 6% per annum, calculate the Present Value (PV) of this annuity and choose the correctanswer from the choices given.(Seminar 3, Slide 10, 11, 12, 13)PV = (CF/i) * [1- 1/(1+i)^n]CF = 12,000 i = 0.06 (6%) n = 7
PV
= (12000/0.06) * [1 – 1/(1+0.06)^7]= \$66,988.58