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The Pennington Corporation issued a new series of bonds on January 1, 1990. The bonds were...

The Pennington Corporation issued a new series of bonds on January 1, 1990. The bonds were sold at a price of $1050 (the par value being $1000), had a 12% coupon, and the original maturity period of 25 years (i.e., maturity date = December 31, 2014). Coupon payments are made quarterly on March 31, June 30, September 30, and December 31, respectively. What would be the price of the bond on January 1, 2000, 10 years later, assuming that the interest rates (I/Y) had fallen to 8%? In addition, what would be the current yield on the bond (as on January 1, 2000)?

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ANSWER IN THE IMAGE ((YELLOW HIGHLIGHTED). FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE. THUMBS UP PLEASE.

jeff jeffy answered 1 year ago
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