In: Finance
A 15-year bond issue of 5,100,000 and bearing interest at 4% payable annually is sold to yield 4.4% compounded semi-annually. What is the issue price of the bonds?
Issue Price of the Bond
Variables |
Financial Calculator Keys |
Figures |
Par Value/Face Value of the Bond [$5,100,000] |
FV |
5,100,000 |
Coupon Amount [$5,100,000 x 4.00% x ½] |
PMT |
102,000 |
Market Interest Rate or Yield to maturity on the Bond [4.40% x ½] |
1/Y |
2.20 |
Maturity Period/Time to Maturity [15 Years x 2] |
N |
30 |
Bond Price |
PV |
? |
Here, we need to set the above key variables into the financial calculator to find out the Price of the Bond. After entering the above keys in the financial calculator, we get the Price of the Bond = $4,877,715.48
“Hence, the Issue Price of the Bond will be $4,877,715.48”