The Morrissey Company's bonds mature in 7 years, have a parvalue of $1,000, and make...

The Morrissey Company's bonds mature in 7 years, have a par value of $1,000, and make an annual coupon payment of $70. The market interest rate for the bonds is 8.5%. What is the bond's price?

Expert Solution

Information provided:

Par value= future value= $1,000

Time= 7 years

Coupon payment= $70

Yield to maturity= 8.5%

The price of the bond is calculated by computing the present value.

Enter the below in a financial calculator to compute the present value:

FV= 1,000

PMT= 70

I/Y= 8.5

N= 7

Press the CPT key and PV to compute the present value.

The value obtained is 923.22.

Therefore, the price of the bond is $923.22.

jeff jeffy answered 2 years ago

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