Question

In: Finance

Grohl Co. issued 13-year bonds a year ago at a coupon rate of 7 percent. The...

Grohl Co. issued 13-year bonds a year ago at a coupon rate of 7 percent. The bonds make semiannual payments. If the YTM on these bonds is 10 percent, what is the current bond price?

Solutions

Expert Solution

Price of Bond = PV of future CFs from it.

Period CF PVF @5% Disc CF
1 $      35.00     0.9524 $   33.33
2 $      35.00     0.9070 $   31.75
3 $      35.00     0.8638 $   30.23
4 $      35.00     0.8227 $   28.79
5 $      35.00     0.7835 $   27.42
6 $      35.00     0.7462 $   26.12
7 $      35.00     0.7107 $   24.87
8 $      35.00     0.6768 $   23.69
9 $      35.00     0.6446 $   22.56
10 $      35.00     0.6139 $   21.49
11 $      35.00     0.5847 $   20.46
12 $      35.00     0.5568 $   19.49
13 $      35.00     0.5303 $   18.56
14 $      35.00     0.5051 $   17.68
15 $      35.00     0.4810 $   16.84
16 $      35.00     0.4581 $   16.03
17 $      35.00     0.4363 $   15.27
18 $      35.00     0.4155 $   14.54
19 $      35.00     0.3957 $   13.85
20 $      35.00     0.3769 $   13.19
21 $      35.00     0.3589 $   12.56
22 $      35.00     0.3418 $   11.96
23 $      35.00     0.3256 $   11.39
24 $      35.00     0.3101 $   10.85
24 $ 1,000.00     0.3101 $ 310.07
Price of Bond $ 793.02

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