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Fresh Water, Inc. sold an issue of 23-year $1,000 par value bonds to the public. The bonds have a 9.90 percent coupon rate an

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Answer #1

Information provided:

Par value= future value= $1,000

Time= 23 years

Coupon rate= 9.90%

Coupon payment= 9.90%*1,000= $99

Interest rate= 9.17%

The current market price of the bond is computed by calculating the present value.

Enter the below in a financial calculator to compute the present value:

FV= 1,000-

N= 23

PMT= 99

I/Y= 9.17

Press the CPT key and PV to compute the present value.

The value obtained is 1,690.25.

Therefore, the current market price of the bond is $1,690.25.

In case of any query, kindly comment on the solution.

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