A 20-year bond pays 6% annually on a face value of $1,000. If similar bonds are...
A 20-year bond pays 6% annually on a face value of $1,000. If similar bonds are currently yielding 4%, what is the market value of the bond? Use time value of money tables in Appendix B and Appendix D.
Homework Answers
| n = | 20 | ||
| I = | 4% | ||
| Amount | Factor | Present value | |
| Interest | $ 60 | 13.5903 | $ 815.42 |
| Principal | $ 1,000 | 0.4564 | $ 456.40 |
| Market value of bond | $ 1,271.82 | ||
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A 20-year bond pays 6% annually on a face value of $1,000. If
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