Bonds: Dillard’s Department Stores issued about $40 million in bonds in 2008. They were recently priced...

Bonds: Dillard’s Department Stores issued about $40 million in bonds in 2008. They were recently priced well below par. The bonds mature in about 19 years from today, have a coupon rate of 7.875%, and a yield to maturity of about 12.4%. Assume for simplicity that the coupons are paid annually, and the company will continue to make payments as promised. Using Excel, assume the yield to maturity stays at 12.4% and calculate the price of the bond today and each year from today through maturity. Present your numerical results and also graph them. The graph will help you visualize the effects of time on bond prices.

Expert Solution

Maturity	Price
19	675
18	680
17	685
16	691
15	698
14	706
13	715
12	725
11	736
10	748
9	763
8	778
7	796
6	816
5	838
4	864
3	892
2	924
1	960
0	1,000

WORKINGS

jeff jeffy answered 1 year ago

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