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Novay_Z [31]
3 years ago
14

Grossnickle corporation issued 20-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. today,

the market interest rate on these bonds is 5.5%. what is the current price of the bonds, given that they now have 19 years to maturity?
Business
1 answer:
Dima020 [189]3 years ago
5 0
Bond valuation: 
<span>Par value = Maturity value = FV = $1,000 </span>
<span>Coupon rate = 7.5% </span>
<span>Years to maturity = N = 19 </span>
<span>Required rate = I/YR = 5.5% </span>
<span>(Coupon rate)(Par value) = PMT = $75 </span>
<span>PV = $1,232.15</span>
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