Acme Co. issues a $1,000 face value bond that pays an annual coupon rate of 6.5 percent and matures in four years. Assuming a ma
rket interest rate of 6.0 percent at the time of issuance, the bond's price is closest to
1 answer:
Answer:
$1,017.33
Explanation:
For computing the bond price we have to use the PV function that is shown in the attached spreadsheet which is presented below:
Given that,
Future value or face value = $1,000
Market Rate of interest = 6%
NPER = 4 years
PMT = $1,000 × 6.5% = $65
The formula is shown below:
= PV(Rate,NPER,PMT,FV,type)
So, after solving this, the answer would be $1,017.33
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