## Answers

Unsecured Bonds | Zero-Coupon Bonds | Mortgage Bonds | ||||

1. Maturity Value | 43551856.93 | 25000000 | 46687364 | |||

2. No. of Interest Period | 40 | NIL | 10 | |||

3. Stated Rate Per Period | 3.5% | 0 | 10% | |||

4. Effective Rate Per Period | 12% | 12% | 12% | |||

5. Payment Amount Per Period | 385000 | 0 | 1800000 | |||

6. Present Value | 12440893 | 8049331 | 15965919 | |||

1. Maturity Value = Par Value ( 1+r)^n | ||||||

Hence, r = rate of interest per period. | ||||||

Unsecured Bonds | Zero-Coupon Bonds | Mortgage Bonds | ||||

1. Maturity Value | 11000000 X ( 1+3.5%)^40 | 25000000 X(1+0)^0 | 18000000 X (1+10%)^10 | |||

2. Interest Period determien the accrual of interest either monthly, quarterly, semi annually or annually. | ||||||

Hence, check the accrual period X No. of Years | ||||||

Unsecured Bonds | Zero-Coupon Bonds | Mortgage Bonds | ||||

2. No. of Interest Period | 4 Times in a Years X 10 Years | NIL | 1 time in a Year X 10 Years | |||

3. Stated Rate , Rate is always shown at Annual basis. | ||||||

Unsecured Bonds | Zero-Coupon Bonds | Mortgage Bonds | ||||

3. Satted Rate | as Quarterly rest, hence 14 % / 4 = 3.5 % | 0 | 10 % / 1 = 10 % | |||

4. Effective Rate, the NPV of the inflow and outflow is NIL | ||||||

as already stated in Question at 12% in all three cases | ||||||

5. Payment Amount , it is payment accrual of interest | ||||||

Unsecured Bonds | Zero-Coupon Bonds | Mortgage Bonds | ||||

5. Payment Amount | 11000000 X 3.5% | 0 | 18000000 X 10% | |||

6. Present Value, PV is the Present valueof All flows at effective rate of Interest | ||||||

Unsecured Bonds | Zero-Coupon Bonds | Mortgage Bonds | ||||

6. Present Value | 11000000 X 3.5% (3%, 40 period) + 11000000 X (12% , 10th) | 0+ 25000000 X (12%, 10th Year) | 18000000 X 10% (12%, 10 Years) +18000000 (12%, 10Th Year) | |||