Question 1 of 1:

Bonds and Analysis
The Garcia Company’s bonds have a face value of $1,000, will mature in ten years, and carry a coupon rate of 16 percent. Assuming that the interest payments are made semi-annually, answer the following:
a. Determine the present value of the bond’s cash flows if the required rate of return is 16.64 percent.
b. How would your answer change if the required rate of return is 12.36 percent?
Click here to access the worksheet for this assessment.

Source textbook:Melicher, R. W., & Norton, E. A. (2011). Introduction to finance: Markets, investments, and financial management (14th ed.). Hoboken, NJ: John Wiley.

Submission Requirements:
Answer each problem in detail with conclusion and results.
Submit your answer in a Microsoft Excel file, showing step-by-step solutions to all calculations.

Evaluation Criteria:
You will be evaluated on the following points using the rubric for your performance in this assessment:
• Did you accurately calculate the present value of the bond’s cash flows if the required rate of return is 16.64 percent?
• Did you calculate the present value of the bond’s cash flows if the required rate of return changes to 12.36 percent?
Click here to download the rubric that will be used to evaluate this lab.