Question

Ba Corp is issuing a 10 year bond with a coupon rate of 9.05 percent. the interest rate of similar bonds is currently 4.52 percent

CALCULATOR FULL SCREEN PRINTER VERSION RACK Problem 8.1 BA Corp is issuing a 10-year bond with a coupon rate of s9.05 percent. The interest rate for similar bonds is currently 4.52 percent. Assuming annual payments, what is Value of bond Click if you would like to Show Work for this.question: Open Show. Work ts bssed on the Paint Potencial Polcy set by your instructor By accessing this Question Assistance, you wil learn while you sorm points bes Cam Maxlmum Points available only if you answer this quetion correctly in your first /222019 ое Type here to search 8 0 8 5 6

Answer 1

8.1

Using the BA 2 PLUS calculator, we can find put the value of the bond as :

FV= $1000

PMT = $90.5

I/Y = 4.52%

N= 10 YEARS

COMPUTE PV:

THE PV OF THE BOND IS $1358.09.

It can also be computed as :

90.5/ 1.0452^1 + 90.5/ 1.0452^2 + 90.5/1.0452^3 + ......1090.5/1.0452^10

The present value of the bond will be $1358.09