Question

Madsen Motors's bonds have 8 years remaining to maturity. Interest is paid annually; they have a...

Madsen Motors's bonds have 8 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 12%; and the yield to maturity is 6%. What is the bond's current market price? Round your answer to the nearest cent.

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Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

B $1,000.00 12.00% Face value of Bond Coupon rate Years until maturity Yield to maturity 6.00% Current Market Price of Bond $

Cell reference -

1000 0.12 -Nm 700 Face value of Bond Coupon rate Years until maturity Yield to maturity 0.06 Current Market Price of Bond =PV

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.

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