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pogonyaev
2 years ago
14

A $1,000.00 bond at 85 1/4 % pays 6.8 % annual interest. Calculate cost of bond.

Mathematics
1 answer:
stepladder [879]2 years ago
8 0

Based on the par value of the bond and the percentage it was issued at, the cost of the bond is $852.50.

<h3>What is the cost of the bond?</h3>

The current cost of the bond is the present value of the bond's cashflows and its par value.

This is taken into account when the bond is issued at a certain percentage which in this case is 85 ¹/₄%.

The cost of the bond is:

= 1,000 x 85 ¹/₄%

= $852.50

Find out more on the cost of bonds at brainly.com/question/15567868.

#SPJ1

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