Question

Assume a par value of $1,000. Caspian Sea plans to issue a 19.00 year, annual pay bond that has a coupon rate of 7.82%. If the yield to maturity for the bond is 8.33%, what will the price of the bond be?

Answer format: Currency: Round to: 2 decimal places.

Answer 1

Interest = $1,000 * 0.0782 = $78.2

Current bond price = $78.2(PVIFA 8.33%,19) + $1,000(PVIF 8.33%,19)

Current bond price = ($78.2 * 9.37980451271) + ($1,000 * 0.21866228399)

Current bond price = $952.16