Question

Bond valuation—Semiannual interest   Find the value of a bond maturing in 11 ​years, with a $1,000 par value and a coupon interest rate of 14​% ​(7​% paid​ semiannually) if the required return on​ similar-risk bonds is 13​% annual interest left (6.5% paid​ semiannually).

The present value of the bond is nothing. ​(Round to the nearest​ cent.)

Answer 1

Value of Bond is PV of CFs from it.

Period	CF	PVF @6.5%	Disc CF
1	$      70.00	0.9390	$      65.73
2	$      70.00	0.8817	$      61.72
3	$      70.00	0.8278	$      57.95
4	$      70.00	0.7773	$      54.41
5	$      70.00	0.7299	$      51.09
6	$      70.00	0.6853	$      47.97
7	$      70.00	0.6435	$      45.05
8	$      70.00	0.6042	$      42.30
9	$      70.00	0.5674	$      39.71
10	$      70.00	0.5327	$      37.29
11	$      70.00	0.5002	$      35.01
12	$      70.00	0.4697	$      32.88
13	$      70.00	0.4410	$      30.87
14	$      70.00	0.4141	$      28.99
15	$      70.00	0.3888	$      27.22
16	$      70.00	0.3651	$      25.56
17	$      70.00	0.3428	$      24.00
18	$      70.00	0.3219	$      22.53
19	$      70.00	0.3022	$      21.16
20	$      70.00	0.2838	$      19.87
21	$      70.00	0.2665	$      18.65
22	$      70.00	0.2502	$      17.51
22	$ 1,000.00	0.2502	$    250.21
Value of Bond			$ 1,057.68

Value of Bond is $ 1057.68