In: Finance
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? |
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 |