Jackson Corporation’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, a
nd the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds?
1 answer:
Answer:
$928.39
Explanation:
In this question, we use the present value formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Future value = $1,000
Rate of interest = 9%
NPER = 12 years
PMT = $1,000 × 8% = $80
The formula is shown below:
= PV(Rate;NPER;PMT;FV;type)
So, after solving this, the answer would be $928.39
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Answer:
9.43%
Explanation:
The computation of the internal rate of return is calculated by using the spreadsheet which is shown in the attachment
The internal rate of return is the return at which the net present value comes to zero i.e.
Net present value = 0
initial investment = Present value of cash flows after taking the discounting factor
After solving the given problem, the internal rate of return is 9.43%
