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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 3 years ago
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