macy's is planning a store expansion by issuing 10-year zero coupon bond that makes semi-annual coupon...
macy's is planning a store expansion by issuing 10-year zero
coupon bond that makes semi-annual coupon payments at a rate of
5.875% with a face value of $1,000. Assuming semi-annual
compounding, what will be the price of these bonds, if the
appropriate yield to maturity (discount rate) is 14%?
PV= ?
i/y= ?
n=?
PMT=?
FV=?
Homework Answers
| Face Amount | $1,000 | |
| Interest Payment | $29.375($1,000*5.875%*6/12) | |
| Market Interest rate per period | 7.00%(14.00%*6/12) | |
| Number of periods | 20(10 years*2 payments each year) | |
| Issue Price of Bond =$29.375*PVAF(7.00%,20) + $1,000*PVIF(7.00%,20) =$29.375*10.59401 + $1,000*0.25842=$569.62 | ||
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