Question

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%

Answer 1

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