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Semiannual interest Find the value of a bond maturing in 4 years, with a $1,000 par value

Semiannual interest Find the value of a bond maturing in 4 years, with a $1,000 par value and a coupon interest rate of 13% (6.5% paid semiannually) if the required return on similar-risk bonds is 17% annual interest (8.5% paid semiannually). 


The present value of the bond is $ _______ . (Round to the nearest cent.)

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Answer #1

M = $1000, n = 4 * 2 = 8 semi-annual periods, C = 6.5% *$1000 = $65 (semi-annually), i = 8.5% semi-annually

P = $366.55 + $520.67

P = $887.2

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