Homework Answers
Par Value = $18,000
Annual Coupon Rate = 15.00%
Annual Coupon = 15.00% * $18,000
Annual Coupon = $2,700
Time to Maturity = 12 years
Annual Required Return = 16.00%
Price of Bond = $2,700 * PVIFA(16.00%, 12) + $18,000 *
PVIF(16.00%, 12)
Price of Bond = $2,700 * (1 - (1/1.16)^12) / 0.16 + $18,000 *
(1/1.16)^12
Price of Bond = $2,700 * 5.197107 + $18,000 * 0.168463
Price of Bond = $17,064.52
The value of the bond is $17,064.52
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