Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / A company has a $1000 par value bond outstanding paying annual interest of 8%
A company has a $1000 par value bond outstanding paying annual interest of 8%. The bond matures in 20 years. If the present yield to maturity for this bond is 10%, calculate the current price of the bond. Use annual analysis.
FV = par value = 1000
Annual payment = 1000 * 8% = 80
Number of years = 20
Discount Rate = yield to maturity = 10%
By a financial calculator, or EXCEL commend "=PV(10%,20,80,1000)"
we can compute the present value of the bond is PV = $829.73
It is equal to the current price of the bond.
