eBook Problem Walk-Through Nesmith Corporation's outstanding bonds have a $1,000 par value, an 11% semiannual coupon,...

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Question

Answer 1

Answer #1

Using financial calculator to calculate present value

Inputs: I/y = 13% / 2 = 6.5% (semiannual)

Fv = 1,000

N = 7 × 2 = 14 ( semiannual )

Pmt = 11% × 1,000 = 110 / 2 = 55 ( semiannual)

Pv = compute

We get, present value of the bond as $81.66

So the bond's price is $81.66

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Answer 2

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