Arts and Crafts Warehouse wants to issue 15-year, zero coupon bonds that yield 7.5 percent. What...
Arts and Crafts Warehouse wants to issue 15-year, zero coupon bonds that yield 7.5 percent. What price should it charge for these bonds if the face value is $1,000? (Assume semi-annual compounding.)
Homework Answers
| Face value (FV) | $ 1,000 |
| Coupon rate | 0.00% |
| Number of compounding periods per year | 2 |
| Interest per period (PMT) | $ - |
| Number of years to maturity | 15 |
| Number of compounding periods till maturity (NPER) | 30 |
| Market rate of return/Required rate of return | 7.50% |
| Market rate of return/Required rate of return per period (RATE) | 3.75% |
| Bond price | PV(RATE,NPER,PMT,FV)*-1 |
| Bond price | $ 331.40 |
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