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sp2606 [1]
3 years ago
12

Problem 6-6 Bond Prices [LO 2] App Store Co. issued 16-year bonds one year ago at a coupon rate of 6.2 percent. The bonds make s

emiannual payments. Required: If the YTM on these bonds is 5.4 percent, what is the current bond price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Business
1 answer:
nignag [31]3 years ago
7 0

Answer:

$1,081.53

Explanation:

For computing the current bond of the price we need to use the present value formula i.e to be shown in the attachment below:

Given that,  

Assuming Future value = $1,000

Rate of interest = 5.4% ÷ 2 = 2.7%  

NPER = (16 years - 1 years) × 2 = 30 years

PMT = $1,000 × 6.2% ÷ 2 = $31

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after applying the above formula, the current bond price is $1,081.53

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