In: Finance
A year ago, Co. sold 17yr bonds. The coupon rate is7.8%. Face value is $1,000. They're semiannual payments. |
Required: |
The YTM is 5.5%, what's the price? Hint: don't forget to adjust the maturity for it being a year later, so the NPER has declined by two semi-annual periods. Once again, for all the semi-annual problems divide the coupon rate and YTM by 2, and multiply NPER by 2. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
Current bond price | $ |
Price of Bond = PV of Cfs from it.
Particulars | Amount |
Coupon Amount | $ 39.00 |
Maturity Value | $ 1,000.00 |
Disc Rate | 2.750% |
Starting | 1 |
Ending on | 32 |
Period | Cash Flow | PVF/ PVAF @2.75 % | Disc CF |
'1 - 32 | $ 39.00 | 21.1003 | $ 822.91 |
'32 | $ 1,000.00 | 0.4197 | $ 419.74 |
Bond Price | $ 1,242.65 |
PVAF = Sum [ PVF(r%, n) ]
PVF = 1 / ( 1 + r)^n
Where r is int rate per Period
Where n is No. of Periods
PVAF using Excel:
+PV(Rate,NPER,-1)
Rate = Disc rate
Nper = No. of Periods
Pls comment, if any further assistance is required,