Question
In: Finance
Now the bond has a yield to maturity of 14.94 percent, compounded semi-annually. What is the current price of the bond?
25 years ago, Mini Max Inc. issued 30 year to maturity zero-coupon bonds with a par value of $1,000. Now the bond has a yield to maturity of 14.94 percent, compounded semi-annually. What is the current price of the bond? Round the answer to two decimal places.
Solutions
Expert Solution
We will use the PV function of excel to find the current price of the zero-coupon bond. Years to maturity remaining 30-25=5 years
Rate=14.94%/2, Nper=5*2=10,Pmt=0 (since there is no periodic payment because it is zero coupon bond),FV=-$1000
Therefore, the current price of the zero-coupon bond is $486.55.
jeff jeffy answered 2 years agoRelated Solutions
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