CR =6%, i = 5.4%, 4-year bond, bond price?
Information provided:
Par value= future value=$1,000
Time= 4 years
Coupon rate= 6%
Coupon payment= 0.06*1,000= $60
Interest rate= 5.4%
The price of the bond is computed by calculating the present value.
Enter the below in a financial calculator to compute the present value:
FV= 1,000
N= 4
PMT= 60
I/Y= 5.4
Press the CPT key and PV to compute the present value.
The value obtained is 1,021.0795
Therefore, the price of the bond is $1,021.08.
In case of any query, kindly comment on the solution.
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