In: Finance
Madsen Motors's bonds have 20 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 6%, and the yield to maturity is 8%. What is the bond's current market price? Round your answer to the nearest cent.
Computation Of Bond Price | ||
a | Annual Coupon Amount | $ 60.00 |
b | Present Value Annuity Factor for (20 Years,8%) | 9.818147 |
c | Present Value Of Annual Interest (a*b) | $ 589.09 |
d | Redemption Value | $ 1,000.00 |
e | Present Value Of (20 Years,8%) | 0.21455 |
g | Present Value Of Redemption Amount (d*e) | $ 214.55 |
f | Bond Price(c+g) | $ 803.64 |