Question

Suppose you structured a bond deal for Kanye West that paid him $20 million upfront, with future royalties and streaming revenues from his past albums going towards payments to bondholders. Each bond had a face value of $1,000 and a coupon rate of 6.6% with semi-annual coupons. If the bonds have 12 years remaining until maturity and the current yield to maturity is 8.6%, what price is each bond trading at right now? Round to the nearest cent.

Answer 1

Function Arguments Rate 8.6%/2 Nper 12*2 Pmt 66/2 FV 1000 Type o 1 1 1 = 0.043 = 24 = 33 = 1000 = 0 1 = -852.107685 Returns the present value of an investment: the total amount that a series of future payments is worth now. Type is a logical value: payment at the beginning of the period = 1; payment at the end of the period = 0 or omitted. Formula result = $852.11 Help on this function OK Cancel

Hence, Price of the bond is $852.11

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