A bond is issued with 15 years to maturity and an annual coupon of 8%. Similar bonds...

A bond is issued with 15 years to maturity and an annual coupon of 8%. Similar bonds are yielding 7%. Calculate the current price of the bond.

Solutions

Expert Solution

Interest = $1,000 * 0.08 = $80

Current bond price = $80(PVIFA 7%,15) + $1,000(PVIF 7%,15)

Current bond price = ($80 * 9.10791400469) + ($1,000 * 0.3624460196)

Current bond price = $1,091.08

jeff jeffy answered 1 year ago

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