Question

Nesmith Corporation's outstanding bonds have a $1,000 par value, an 11% semiannual coupon, 20 years to maturity, and a 15% YTM. What is the bond's price? Round your answer to the nearest cent.

Answer 1

Particulars	Cash flow	Discount factor	Discounted cash flow
present value Interest payments-Annuity (7.5%,40 periods)	$                         55.00	12.59441	$                692.69
Present value of bond face amount -Present value (7.5%,40 periods)	$                    1,000.00	0.05542	$                  55.42
Bond price			$                748.11
Face value			$             1,000.00
Premium/(Discount)			$              (251.89)
Interest amount:
Face value	1,000
Coupon/stated Rate of interest	11.000%
Frequency of payment(once in)	6 months
Interest amount	1000*0.11*6/12=		$                  55.00
Present value calculation:
yield to maturity/Effective rate	15.00%
Effective interest per period(i)	0.15*6/12=		7.500%
Number of periods:
Particulars	Amount
Number of interest payments in a year	2
Years to maturiy	20.0
Number of periods	40

Answer is:

748.11