Question

A company issues a 25-year $9000 bond, redeemable at 97 with bond interest at j₂ = 8%. The bond is callable at the end of 15 years for $7695, at the end of 20 years for $9160 or at the end of 10 years for $10165. Determine the price to guarantee the investor a yield of j₂ = 12%. Do not round intermediate answers.

Answer 1

=MIN(PV(12%/2,2*15,-9000*8%/2,-7695),PV(12%/2,2*20,-9000*8%/2,-9160),PV(12%/2,2*10,-9000*8%/2,-10165),PV(12%/2,2*25,-9000*8%/2,-9000*97%))
=6148.20723