Question
In: Finance
The market price of an $1070000, ten-year, 12% (pays interest semiannually) bond issue sold to yield...
The market price of an $1070000, ten-year, 12% (pays interest semiannually) bond issue sold to yield an effective rate of 10% is
A) $1203346
B) $1212599
C) $2003424
D) $1201492
Solutions
Expert Solution
| Computatio Of Value Of The Bond | ||
| a | Semi-annual Coupon Amount | $ 64,200.00 |
| ($1070000*12%/2) | ||
| b | Present Value Annuity Factor for (20 Years,5%) | 12.462210 |
| c | Present Value Of Annual Interest (a*b) | $ 8,00,073.90 |
| d | Redemption Value | $ 10,70,000.00 |
| e | Present Value Factor Of (20 Years,5%) | 0.37689 |
| g | Present Value Of Redemption Amount (d*e) | $ 4,03,271.75 |
| f | Bond Value (c+g) | $ 12,03,346 |
jeff jeffy answered 2 years agoRelated Solutions
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