What is the price today of a zero coupon bond with a face value of $4,000 if the relevant market yield is 9% pa and with 2 years to maturity? Calculate the price to the nearest dollar

Accounting Aug 07, 2020

Expert Solution

We can calculate the price of the bond by using the following formula in excel:-

=-pv(rate,nper,pmt,fv)

Here,

PV = Price of the bond

Rate = 9%

Nper = 2 periods

Pmt = 0

FV = $4,000

Substituting the values in formula:

= -pv(9%,2,0,4000)

= $3,366.72 Or $3,367

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