challange for all
allgrp vu
Suppose Ali Inc issues ten years bonds (Rs.1000) with an annual coup of 8.6% similar ten year bonds are paying 8.0% interest. What is the value of Ali’s new bonds that is what should be its price?
2
An Interest offers Rs 2500 per year for 8 year payment occurring one year from today. If the required return is 10% what is the value of the investment?
What would be the value of the payment occurred for 30 years ? For 60 years? Forever?
Romaan Khan
> Suppose Ali Inc issues ten years bonds (Rs.1000) with an annual coup of 8.6%
> similar ten year bonds are paying 8.0% interest. What is the value of Ali’s
> new bonds that is what should be its price?
>
FV = PV (1 + i )n
FV =1000*(1+ .08)10
FV =1000*(1.08)10
FV =2158
Romaan Khan
BHAI JAAN AP KA 1 QUSTION KA SOLTION YE HAI OKKKKKKKKKKKKKKKK
> Suppose Ali Inc issues ten years bonds (Rs.1000) with an annual coup of 8.6%
> similar ten year bonds are paying 8.0% interest. What is the value of Ali’s
> new bonds that is what should be its price?
Zubair Hussain
Dear Mr. challenger.
Here is our try with limited knowledge.
Bond Price = pv(all inflows) + pv(face value)
So in this case
Bond Price = PV(of all coupon payments) +PV(1000)
as bond will pay same amount for the next 10 year assume it annuity so we use annuity formula if some done get this formula he/she can try manually PV for every year for ten years.
8.6% of one thousand = 1000*.086 = 86
Which he gets every year as coupon payment
PV = Amt * PVIF = 1 - (1+i)^-n
i
i=8%
price = 86* [( 1 – (1.08)^-10) ]/.08 + (1000/1.08)^10
price = 577.0670003 + 463.1934881 = 1040.260488
= 1040.26
I hope, its loud and clear !!!!!
Regards
zubair hussain
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mc090401978 Usman Manshah
Jazmine Khan
Those who need help open these link and find previous assignmnts n papers
http://www.virtualians.com/vd/index.php
http://groups.google.com/group/vuZs/web/mbacourselist?_done=/group/vuZone%3F
http://vustudents.ning.com/page/vu-online-mid-term-papers-of-1
http://meo786.forumotion.com/vu-online-papers-f142/vu-online-mid-term-papers-of-2009-t10306.htm
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Zubair Hussain
Dear Mr. Challenger.
Here is I tried with your limited knowledge, Hope you got this solution well in time.
Regards
Zubair hussain
Suppose Ali Inc issues ten years bonds (Rs.1000) with an annual coup of 8.6% similar ten year bonds are paying 8.0% interest. What is the value of Ali’s new bonds that is what should be its price?
Bond Price = pv(all inflows) + pv(face value)
So in this case
Bond Price = PV(of all coupon payments) +PV(1000)
as bond will pay same amount for the next 10 year assume it annuity so we use annuity formula if some done get this formula he/she can try manually PV for every year for ten years.
8.6% of one thousand = 1000*.086 = 86
Which he gets every year as coupon payment
PV = Amt * PVIF = 1 - (1+i)^-n
i
i=8%
price = 86* [( 1 – (1.08)^-10) ]/.08 + (1000/1.08)^10
price = 577.0670003 + 463.1934881 = 1040.260488 = 1040.26
Q2
An Interest offers Rs 2500 per year for 8 year
payment occurring one year from today. If the required return is 10% what is
the value of the investment?
What would be the value of the payment occurred
for 30 years ? For 60 years? Forever?
Its annuity case and as “payment occurring one year from today” its normal annuity
Let me write formula for annuity.
FV = AMT* FVIF
FVIF = (1+i)^n - 1
i
fv= 2500 *[ (1+.08)^8 -1]/.08
fv = 2500 * 10.63 = 26591.15
for 30 years
fv= 2500 *[ (1+.08)^30 -1]/.08
= 2500* 113.28 = 283208
for 60 years
fv= 2500 *[ (1+.08)^60 -1]/.08
= 2500* 1253.213 = 3133033
forever… its perpetuity.
Future value of perpetuity=constant cash flow/interest rate
2500/.08 = 31250
Asim Chaudhry
Marina khan
wah g wah zubair bhai g deeeeeeeee greattttttttttt may kya chaaaaaa gayeeeeeee oooooAsim Chaudhry
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God bless
Marina khan
mc090403649 Afshan Akbar
mc090403231 Hira Ali
plz tell me its answere
Question No: 41 ( Marks: 10 )
Ali is working as the head of tea unit of a multinational organization. Expenses of tea unit are increasing day by day. He is much worried. He decided to call a meeting and ask for some suggestions to reduce expenses from his subordinates. Different subordinates suggest for the downsizing of research department as it was not working efficiently. Ali still wants to think over this suggestion. What steps he should take to make a rational decision?