Question
In: Finance
What would you pay for a $140,000 debenture bond that matures in 15 years and pays...
What would you pay for a $140,000 debenture bond that matures in 15 years and pays $7,000 a year in interest if you wanted to earn a yield of:
4%
5%
6%
Solutions
Expert Solution
| a) | Price of bond | = | =-pv(rate,nper,pmt,fv) | Where, | ||||
| = | $ 1,55,565.74 | rate | = | 4% | ||||
| nper | = | 15 | ||||||
| pmt | = | $ 7,000 | ||||||
| fv | = | $ 1,40,000 | ||||||
| b) | Price of bond | = | =-pv(rate,nper,pmt,fv) | Where, | ||||
| = | $ 1,40,000.00 | rate | = | 5% | ||||
| nper | = | 15 | ||||||
| pmt | = | $ 7,000 | ||||||
| fv | = | $ 1,40,000 | ||||||
| c) | Price of bond | = | =-pv(rate,nper,pmt,fv) | Where, | ||||
| = | $ 1,26,402.85 | rate | = | 6% | ||||
| nper | = | 15 | ||||||
| pmt | = | $ 7,000 | ||||||
| fv | = | $ 1,40,000 | ||||||
jeff jeffy answered 7 months agoRelated Solutions
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