Petty Productions Inc. recently issued 30-year $1,000 face value, 12% annual coupon bonds. The market discount rate for this bon
d is only 7%. What is the current price of this bond?
1 answer:
Answer:
The correct answer is $1,620.45
Explanation:
According to the scenario, the computation of the given data are as follows:
Time period (Nper) = 30 years
Face value (FV) = $1,000
Rate (r) = 7%
Coupon payment = $1,000 × 12% = $120
So, by putting all these in the financial formula, we get
The attachment is attached below.
So, the current price of the bond is $1,620.45.
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