Question

Billy Bob, Inc. bonds have 5-years to maturity, a 8.1% coupon rate, but pays semiannually, and a par value of $1,000. The going rate of interest (YTM or r d) is 7.3%, based on semiannual compounding. What is the bond's current price? (Answer in $s to the nearest cent xxxx.xx with no commas or $-sign needed.)

Answer 1

P = F*r*[1 -(1+i)^-n]/i + C*(1+i)^-n with

F = par value
C = maturity value
r = coupon rate per coupon payment period
i = effective interest rate per coupon payment period
n = number of coupon payments remaining

Bond price Present value of futtuae Cashflow x 0,6984 $(032.99 こ lO33