Marco Chip, Inc just issued zero-coupon bonds with a par value of $1,000

Finance Nov 24, 2020

Marco Chip, Inc just issued zero-coupon bonds with a par value of $1,000. The bond has a maturity of 8 years and a yield to maturity of 7.47 percent, compounded semi-annually. What is the current price of the bond? Round the answer to two decimal places.

Expert Solution

We will use the BA 2 plus financial calculator to find the current price. Please press the following keys on your calculator-

2ND FV

1000 FV

16 N (8×2)

3.735 I/Y (7.47/2)

0 PMT

CPT PV

PV = -556.15 (ignore the minus sign as it just shows an outflow)

Answer = 556.15

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