Moerdyk Corporation's bonds have a 15-year maturity, a 7.25% semiannual coupon, and a par value of $1,000. The going interest ra
te (rd) is 5.00%, based on semiannual compounding. What is the bond's price?
1 answer:
Answer:
$1,235.47
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 = 5% ÷ 2 = 2.5%
NPER = 15 years × 2 = 30 years
PMT = $1,000 × 7.25% ÷ 2 = $36.25
The formula is shown below:
= PV(Rate;NPER;PMT;FV;type)
So, after solving this, the answer would be $1,235.47
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