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

Question

3 years ago

9

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.)

Business

1 answer:

spayn [35] · Answer 1 · 2022-04-14T16:46:19+03:00

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