The WeKnowThisStuff Company issued a $1,000 par value, 6% coupon, 8 year bond. The interest is paid semiannually and the market is currently requiring 5.5% on this risk level bond. What is the current value of the bond? SHOW ALL WORK FOR FULL CREDIT USING THE TI BAII PLUS CALCULATOR.
Current Value of the Bond
Variables |
Financial Calculator Keys |
Figures |
Par Value/Face Value of the Bond [$1.000] |
FV |
1,000 |
Coupon Amount [$1,000 x 6.00% x ½] |
PMT |
30 |
Market Interest Rate or Yield to maturity on the Bond [5.50% x ½] |
1/Y |
2.75 |
Maturity Period/Time to Maturity [8 Years x 2] |
N |
16 |
Bond Price |
PV |
? |
Here, we need to set the above key variables into the financial calculator to find out the Price of the Bond. After entering the above keys in the financial calculator, we get the Price of the Bond (PV) = $1,032.01.
“Hence, the Current Value of the Bond will be $1,032.01”
The WeKnowThisStuff Company issued a $1,000 par value, 6% coupon, 8 year bond. The interest is...
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