. Suppose this year you buy 5% coupon rate, $100 face value bond for $90 that has 3 years left till maturity. Suppose next year market interest rates decrease to 2% and you decide to sell it your bond that year. a) Calculate the selling price of your bond next year. In another words, what price would make your bond competitive when market yields are at 2.0%?

$105.83

Explanation:

The computation of the selling price of the bond is as follows

Number of coupons remaining = n = 2

Coupon amount = C = 100 × 5% = $5

Maturity amount = FV = $100

Purchase price = P = $90

Selling price = PV of future payments  at 2%

Now

Selling price = S is

= 5 × (P/A,0.02,2) + 100 × (P/F,0.02,2)

= 5 × 1.9416 + 100 × 0.9612

= $105.83

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.