Bullrite bonds have the following 5 1/2% coupon, 11 years until maturity , $1000 par and...

Bullrite bonds have the following 5 1/2% coupon, 11 years until maturity , $1000 par and are currently selling st $1054. If you want to make a 5% return, what would you be willing to pay for the bond?

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Expert Solution


Computation Of Bond Value

a	Annual Coupon Amount	$ 55.00

b	Present Value Annuity Factor for (11 Years,5%)	8.306414
c	Present Value Of Annual Interest (a*b)	$ 456.85
d	Redemption Value	$ 1,000.00
e	Present Value Of (11 Years,5%)	0.58468
g	Present Value Of Redemption Amount (d*e)	$ 584.68
f	Price Of The Bond (c+g)	$ 1,041.53

willing to pay for the bond =1041.53

jeff jeffy answered 1 year ago

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