Name

Projyal Dey
SantoshKumar Vasudharan
Rajesh Sarangi

Reg. No
29/5
Nair
37/5
32/5

Phone
+91 9007880874
+91 9007880680
+91 9007880835

Question 1
If the marketwide interest rate is below the coupon rate, then the bond is sold at a higher price
than the face value. This is known as "premium"
If the marketwide interest rate is above the coupon rate, then the bond is sold at a lower price
than the face value. This is known as "discount"
Amount received from its 8% bond issued
Liability of Long term debt for Year ended 2007
Liability of Long term debt for Year ended 2006
Current market Value of the bond at the effective interest rate of 6%
Question 2
Existing Liability as of Jan 2009
Proceeds received from new 6% Bond
Additional cash to be paid to repay 8% Bond
PV of Total increase in Liability if 8% Bonds are refunded with 6% Bond and additional cash

PV of Total savings in interest between 8% bond and 6% bond (Interest savings of $100000 semi-a
Difference (B16 - B14)
Therefore, we would not recommend Rene to issue the new 6% Bonds worth $10 million
Question 3
New Bonds to be issued
Existing Liability as of Jan 2009
Proceeds received from the new 6% Bond
PV of Total increase in Liability if 8% Bonds are refunded with 6% Bond and additional cash
PV of total interest to be paid for 8% bond
PV of total interest to be paid for 6% bond
PV of Total savings in interest between 8% bond and 6% bond
Difference (B28 - B26)

To get a break even on the savings

Number of Bonds to be issued
Existing Liability as of Jan 2009
Proceeds received from the new 6% Bond
Cash Proceeds
PV of Total increase in Liability if 8% Bonds are refunded with 6% Bond and additional cash
PV of Total savings in interest between 8% bond and 6% bond
Difference (B28 - B26)
Therefore, we would recommend Rene to issue approximately 8860, 6% Bonds

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$508,971.41

$11,541.50
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8859.64 (Using solver varying this value)

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$0.00

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Rs.13.01
10000000
8
9
Year
Liab at beg Int at 4.5
Liab at end before payment
Payment
2-Jan-00
0.5
### 408596.44
9488517.21 400000
2-Jul-00
1
### 408983.27
9497500.49 400000
2-Jan-01
1.5
### 409387.52
9506888.01 400000
2-Jul-01
2
### 409809.96
9516697.97 400000
2-Jan-02
2.5
### 410251.41
9526949.38 400000
2-Jul-02
3
### 410712.72
9537662.1 400000
2-Jan-03
3.5 9137662.1 411194.79
9548856.9 400000
2-Jul-03
4 9148856.9 411698.56
9560555.46 400000
2-Jan-04
4.5
###
412225
9572780.45 400000
2-Jul-04
5
### 412775.12
9585555.57 400000
2-Jan-05
5.5
###
413350
9598905.57 400000
2-Jul-05
6
### 413950.75
9612856.32 400000
2-Jan-06
6.5
### 414578.53
9627434.86 400000
2-Jul-06
7
### 415234.57
9642669.43 400000
2-Jan-07
7.5
### 415920.12
9658589.55 400000
2-Jul-07
8
### 416636.53
9675226.08 400000
2-Jan-08
8.5
### 417385.17
9692611.26 400000
2-Jul-08
9
### 418167.51
9710778.76 400000
2-Jan-09
9.5
### 418985.04
9729763.81 400000
2-Jul-09
10
### 419839.37
9749603.18 400000
2-Jan-10
10.5
### 420732.14
9770335.32 400000
2-Jul-10
11
### 421665.09
9792000.41 400000
2-Jan-11
11.5
### 422640.02
9814640.43 400000
2-Jul-11
12
### 423658.82
9838299.25 400000
2-Jan-12
12.5
### 424723.47
9863022.71 400000
2-Jul-12
13
### 425836.02
9888858.74 400000
2-Jan-13
13.5
### 426998.64
9915857.38 400000
2-Jul-13
14
### 428213.58
9944070.96 400000
2-Jan-14
14.5
### 429483.19
9973554.15 400000
2-Jul-14
15
### 430809.94
10004364.09 400000
2-Jan-15
15.5
### 432196.38
10036560.48 400000
2-Jul-15
16
### 433645.22
10070205.7 400000
2-Jan-16
16.5 9670205.7 435159.26
10105364.95 400000
2-Jul-16
17
### 436741.42
10142106.38 400000
2-Jan-17
17.5
### 438394.79
10180501.16 400000
2-Jul-17
18
### 440122.55
10220623.72 400000
2-Jan-18
18.5
### 441928.07
10262551.78 400000
2-Jul-18
19
### 443814.83
10306366.61 400000
2-Jan-19
19.5
### 445786.5
10352153.11 400000
2-Jul-19
20
### 447846.89
10400000 400000
2-Jul-19
20 10000000
0
10000000
###

Liab at end of Period

9088517.21
9097500.49
9106888.01
9116697.97
9126949.38
9137662.1
9148856.9
9160555.46
9172780.45
9185555.57
9198905.57
9212856.32
9227434.86
9242669.43
9258589.55
9275226.08
9292611.26
9310778.76
9329763.81 $9,329,763.81
9349603.18
9370335.32
9392000.41
9414640.43
9438299.25
9463022.71
9488858.74
9515857.38
9544070.96
9573554.15
9604364.09
9636560.48
9670205.7
9705364.95
9742106.38
9780501.16
9820623.72
9862551.78
9906366.61
9952153.11
10000000
0

$13.59
$456.39

$18.40
$0.17

400000
10000000

$7,360,633.77
$1,719,287.01
$9,079,920.78
$9,079,920.78

Rs.15.42
Rs..54

400000
10000000

6166009.65
5375492.76
11541502.41
$11,541,502.41
###

Existing
New
PV of Total inc in liab

$9,329,763.81
###
1541502
$2,211,738.19

PV of Total savings in int $1,702,767.20

diff
-$508,971.00
New bonds issued

Existing
New
PV of Total inc in liab

###

$11,541.50

$9,329,763.81
$11,541,502.18
$2,211,738.38

PV of Total savings in int $1,014,757.29

diff
-$1,196,981.08
New bonds issued

### $4,463,242.46

$6,166,009.65

###

###