Nesmith Corporation's outstanding bonds have a $1,000 par value, a 7% semiannual coupon, 11 years to...

Nesmith Corporation's outstanding bonds have a $1,000 par value, a 7% semiannual coupon, 11 years to maturity, and an 11% YTM. What is the bond's price? Round your answer to the nearest cent.

Expert Solution

Par/Face value	1000
Annual Coupon rate	0.07
Annual coupon	70
semi-annual coupon	35

Present Value = Future value/[(1+(r/m))^mt]
r is the yield to maturity that is 11%.
m is the compounding period that is 2
mt is the time period.
price of the bond = sum of present values of future cash flows
r/2	0.055
mt	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22
future cash flow	35	35	35	35	35	35	35	35	35	35	35	35	35	35	35	35	35	35	35	35	35	1035
present value	33.17536	31.44583	29.80648	28.25259	26.7797	25.3836	24.06029	22.80596	21.61702	20.49007	19.42187	18.40935	17.44962	16.53993	15.67766	14.86034	14.08563	13.35131	12.65527	11.99551	11.37016	318.7031
sum of present values	748.34

The bond's price is $748.3.

jeff jeffy answered 9 months ago

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