In: Finance
A 10-year GM bond has a 10% coupon rate and was issued 4 years ago. If investors require a return of 12%, calculate the bond’s value. Show the (condensed) time line and key steps of two methods. For the NS method, show the abbreviated equation/expression.
Year | CF | PVF@12% | DCF |
5 | 10 | 0.892857143 | 8.928571 |
6 | 10 | 0.892857143 | 8.928571 |
7 | 10 | 0.892857143 | 8.928571 |
8 | 10 | 0.892857143 | 8.928571 |
9 | 10 | 0.892857143 | 8.928571 |
10 | 110 | 0.892857143 | 98.21429 |
Value of Bond | 142.8571 |