Martinez Motors’ bonds have 17 years remaining to maturity. Interest is paid annually; they have a...

Martinez Motors’ bonds have 17 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 7 percent; and the yield to maturity is 5.5 percent. What is the bond’s current market price?

Solutions

Expert Solution

Interest = $1,000 * 0.07 = $70

The price of the bond is:

Current bond price = $70(PVIFA 5.5%,17) + $1,000(PVIF 5.5%,17)

Current bond price = ($70 * 10.8646085601) + ($1,000 * 0.40244652909)

Current bond price = $1,162.97

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Callaghan Motors' bonds have 12 years remaining to maturity. Interest is paid annually, they have a...

Callaghan Motors' bonds have 12 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 7.5%, and the yield to maturity is 10%. What is the bond's current market price? Round your answer to the nearest cent.

Question 3 Danielle Motors’ bonds have 5 years remaining to maturity. Interest is paid annually, the...

Question 3 Danielle Motors’ bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8 percent. The bonds have a yield to maturity of 9 percent. Required What is the current market price of these bonds? Compute the current yield Compute the duration of the bond Compute the modified duration and interpret your results

The Brownstone Corporation's bonds have 4 years remaining to maturity. Interest is paid annually, the bonds...

The Brownstone Corporation's bonds have 4 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. What is the yield to maturity at a current market price of $880? Round your answer to two decimal places. % What is the yield to maturity at a current market price of $1,129? Round your answer to two decimal places. %

The Brownstone Corporations bonds have 5 years remaining to maturity. Interest is paid annually, the bonds...

The Brownstone Corporations bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%. a) What is the yield to maturity at a current market price of $849? $ b) What is the yield to maturity at a current market price of $1,146? $ c) Would you pay $849 for one of these bonds if you thought that the appropriate rate of YTM was 12%? Explain.

The Brownstone Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds...

The Brownstone Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%. What is the yield to maturity at a current market price of $828? Round your answer to two decimal places. % What is the yield to maturity at a current market price of $1,100? Round your answer to two decimal places. % Would you pay $828 for one of these bonds if...

Wilson Wonders’s bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have...

Wilson Wonders’s bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $900. What is their yield to maturity? Can you please assist.

Callaghan Motor’s bonds have 7 years remaining to maturity. Interest is paid annually, the bonds have...

Callaghan Motor’s bonds have 7 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 5.5 percent. The bonds have a yield to maturity of 8 percent. 1. What is the current market price of these bonds? 2. What is the current yield? 3. What is the capital gain/loss yield?

Jackson Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have...

Jackson Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10.5%. The bonds have a yield to maturity of 11%. What is the current market price of these bonds? Round your answer to the nearest cent.

Madsen Motors's bonds have 13 years remaining to maturity. Interest is paid annually; they have a...

Madsen Motors's bonds have 13 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 11%; and the yield to maturity is 9%. What is the bond's current market price? Round your answer to the nearest cent.

Madsen Motors's bonds have 25 years remaining to maturity. Interest is paid annually, they have a...

Madsen Motors's bonds have 25 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 11%, and the yield to maturity is 12%. What is the bond's current market price? Round your answer to the nearest cent.

Subjects