Question

Calculate the value of a bond that matures in 16 years and has a $ 1 comma 000 par value. The annual coupon interest rate is 13 percent and the​ market's required yield to maturity on a​ comparable-risk bond is 12 percent. The value of the bond is ​$ nothing. ​ (Round to the nearest​ cent.)

Answer 1

Answer:

$1,069.74

Explanation:

We use the present value formula which is shown in the attachment below:

Data provided in the question

Future value = $1,000

Rate of interest = 12%

NPER = 16 years

PMT = $1,000 × 13% = $130

The formula is shown below:

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

So, after solving this, the value of the bond is $1,069.74