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Harry Corp has bonds on the market making annual payments, with eight years to maturity, a...

Harry Corp has bonds on the market making annual payments, with eight years to maturity, a par value of $1,000, and selling for $948. At this price, the bonds yield 5.1 percent. What is the present value of the final payment of $1000?

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Answer #1

Maturity Value = $1,000
Yield to Maturity = 5.10%
Time to Maturity = 8 years

Present Value of Final Payment = Maturity Value / (1 + Yield to Maturity)^Time to Maturity
Present Value of Final Payment = $1,000 / 1.0510^8
Present Value of Final Payment = $671.70

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