BA Corp is issuing a 10-year bond with a coupon rate of 6.04 percent. The interest...

BA Corp is issuing a 10-year bond with a coupon rate of 6.04 percent. The interest rate for similar bonds is currently 5.57 percent. Assuming annual payments, what is the value of the bond?

Expert Solution

Computation Of Bond Price

a	Annual Coupon Amount	$ 60.40

b	Present Value Annuity Factor for (10 Years,5.57%)	7.512382
c	Present Value Of Annual Interest (a*b)	$ 453.75
d	Redemption Value	$ 1,000.00
e	Present Value Of (10 Years,5.57%)	0.58156
g	Present Value Of Redemption Amount (d*e)	$ 581.56
f	Bond Value (c+g)	$ 1,035.31

jeff jeffy answered 2 years ago

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