Question

Ryngaert Inc. recently issued noncallable bonds that mature in 15 years. They have a par value of $1,000 and an annual coupon of 5.7%. If the current market interest rate is 7.0%, at what price should the bonds sell?

Answer 1

Answer:

bonds sell price is $881.6

Explanation:

given data

time = 15 year

par value = $1,000

annual coupon = 5.7%

interest rate t = 7.0%

to find out

bonds sell price

solution

we apply here formula that is

sell price  = $\sum_{1}^{t}$ 57[(1+t)^-1 + .......... + (1+t)^-15] + 1000(1+t)^-15

here t is 0.07                          

so solve it and get

sell price  = 881.6                    

so bonds sell price is $881.6