In: Finance
Madsen Motors's bonds have 23 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 12%, and the yield to maturity is 13%. What is the bond's current market price? Round your answer to the nearest cent.
Computation Of Bond Price | ||
a | Annual Coupon Amount | $ 120.00 |
b | Present Value Annuity Factor for (23 Years,13%) | 7.229658 |
c | Present Value Of Annual Interest (a*b) | $ 867.56 |
d | Redemption Value | $ 1,000.00 |
e | Present Value Of (23 Years,13%) | 0.06014 |
g | Present Value Of Redemption Amount (d*e) | $ 60.14 |
f | Bond price(c+g) | $ 927.70 |
Note: Please refer annuity factor tables.