Lion Corp. has a $10,000 par value bond outstanding with a coupon rate of 4.8 percent paid semiannually and 22 years to maturity

Question

3 years ago

14

Lion Corp. has a $10,000 par value bond outstanding with a coupon rate of 4.8 percent paid semiannually and 22 years to maturity

. The yield to maturity on this bond is 4.2 percent. What is the dollar price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Business

1 answer:

cupoosta [38] · Answer 1 · 2022-09-13T11:50:59+03:00

Answer:

$10,856.08

Explanation:

For computing the dollar price of the bond we have to applied the present value formula which is to be shown in the attachment below:

Given that,

Future value = $10,000

Rate of interest = 4.2% ÷ 2 = 2.4%

NPER = 22 years × 2 = 44 years

PMT = $10,000 × 4.8% ÷ 2 = $240

The formula is shown below:

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

After applying the above formula, the dollar price of the bond is $10,856.08