What is the present value of bonds with the followingcharacteristics: Annual Coupon Rate =3% Par=$1000...

What is the present value of bonds with the following characteristics: Annual Coupon Rate =3% Par=$1000 Maturity=25 years YTM=7%

Expert Solution

Statemnet showing Price or Intrinsic Value

Particulars	Time	PVf @7%	Amount	PV
Cash Flows (Interest)	1.00	0.9346	30.00	28.04
Cash Flows (Interest)	2.00	0.8734	30.00	26.20
Cash Flows (Interest)	3.00	0.8163	30.00	24.49
Cash Flows (Interest)	4.00	0.7629	30.00	22.89
Cash Flows (Interest)	5.00	0.7130	30.00	21.39
Cash Flows (Interest)	6.00	0.6663	30.00	19.99
Cash Flows (Interest)	7.00	0.6227	30.00	18.68
Cash Flows (Interest)	8.00	0.5820	30.00	17.46
Cash Flows (Interest)	9.00	0.5439	30.00	16.32
Cash Flows (Interest)	10.00	0.5083	30.00	15.25
Cash Flows (Interest)	11.00	0.4751	30.00	14.25
Cash Flows (Interest)	12.00	0.4440	30.00	13.32
Cash Flows (Interest)	13.00	0.4150	30.00	12.45
Cash Flows (Interest)	14.00	0.3878	30.00	11.63
Cash Flows (Interest)	15.00	0.3624	30.00	10.87
Cash Flows (Interest)	16.00	0.3387	30.00	10.16
Cash Flows (Interest)	17.00	0.3166	30.00	9.50
Cash Flows (Interest)	18.00	0.2959	30.00	8.88
Cash Flows (Interest)	19.00	0.2765	30.00	8.30
Cash Flows (Interest)	20.00	0.2584	30.00	7.75
Cash Flows (Interest)	21.00	0.2415	30.00	7.25
Cash Flows (Interest)	22.00	0.2257	30.00	6.77
Cash Flows (Interest)	23.00	0.2109	30.00	6.33
Cash Flows (Interest)	24.00	0.1971	30.00	5.91
Cash Flows (Interest)	25.00	0.1842	30.00	5.53
Cash flows (Maturity Amount)	25.00	0.1842	1,000.00	184.20
Intrinsic Value of Bond or Current Bond Price				533.81
Value is $533.81

jeff jeffy answered 2 years ago

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