Excel Courier (Gh.) Ltd. has an 8% bond making semi-annual payments. The bond has a face value of…

Excel Courier (Gh.) Ltd. has an 8% bond making semi-annual payments. The
bond has a face value of GH¢1,000 and has 13 years to maturity. Aseda Co. Ltd.
has just issued a 10-year 10% coupon bond making annual payments. The bond
has a face value of GH¢1,000. What is the value of the two bonds to an investor
whose required rate of return is 9%? (2 marks)
b. Ghana Cocoa Limited has a 6 percent coupon bond outstanding. Ghana Bauxite
Ltd has a 14 percent bond outstanding. Both bonds have 8 years maturity and
make semi-annual payments.
i. How much should an investor who has a required rate of return of 10% pay
for GH¢10,000 worth of each bond? (2 marks)
ii. If the interest rates suddenly rise by 2 percent, what is the percentage change
in the price of these bonds? (2 marks)
c. Lobers, Inc., has two investment proposals, which have the following
characteristics:
Period Project A Project B
0 -9000 -12000
1 5000 5000
2 4000 5000
3 3000 8000
For each project, compute its payback period, its net present value, and its
profitability index using a discount rate of 15 percent. (9 marks)
d. Assume that the cash flows of a project are given as follows:
Year Cash Flow
0 -800
1 500
2 700
3 -650
4 800
5 900
The reinvestment rate is given as 20%, whilst the financing rate has been
specified as 15%. Find the MIRR of the project.