Finance help - Bond Calculations

deepia29

New member
Joined
Oct 12, 2011
Messages
1
Today is January 1, 2012. Kinder Corporation has just issued bonds at par with an effective annual yield of 8.16%, fixed semi-annual coupon payments, total face value of $100,000 ($1000 per bond), and a maturity of 8 years. The first coupon payment is due in 6 months from today.
a) Calculate the dollar amount of the first semi-annual coupon payment.
b) A year has passed, and the second semi-annual coupon payment has just been made. Kinder is concerned about having funds available to repay the face value of its bonds in 7 years’ time. (The semi-annual interest payments can be funded by the operating cash flows.) Kinder would like to invest some funds in the zero-coupon bonds of Morgan Company, having a quoted YTM of 9% (compounded semi-annually) and maturing 7 years later. What is the minimum amount (in dollars) should Kinder invest in Morgan’s zero-coupon bonds on January 1, 2013, to have sufficient funds to repay its own bonds 7 years later?
c) One more year has passed, and the fourth semi-annual coupon payment has just been made. Suppose the effective annual yield to maturity applicable to Kinder’s bonds is now 209 basis points higher than it was when the bonds were issued. If the rates are not expected to change after the second year (that is, after the increase of 209 basis points), calculate the total market value of Kinder’s bonds (in dollars) on January 1, 2014. (10 marks)

I think I have part a right:

($100,000 x 0.0816)/2 = $4,080

Please help =(
 
Top