Masson Inc. recently issued noncallable bonds that mature in 10 years.

Masson Inc. recently issued noncallable bonds that mature in 10 years. They have a par value of $1,000 and an annual coupon of 5.5%. If the current market interest rate is 7.0%, at what price should the bonds sell?

Solutions

Expert Solution

Par Value of noncallable Bond = $1000

Annual Coupon payemnt = $1000*5.5%

= $55

No of years to maturity(n) = 10 years

Current market Interest rates(YTM) = 7%

Calculating the Current price of Bond:-

Price = $386.298 + $508.349

Price = $894.65

So, the Price the bond should sell at $894.65

jeff jeffy answered 2 years ago

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