Question

Morin company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon interest payment of $65. The market requires an interest rate of 6.1% on these bonds. What is the bond's price? a. $1, 024.74 b. $1, 147.71 c. $1, 116.97 d. $1, 280.93 e. $1, 096.47

Answer 1

Answer:

a. $1,024.74

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 or par value = $1,000

Rate of interest = 6.1%

NPER = 8 years

PMT = $65

The formula is shown below:

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

So, after solving this, the answer would be $1,024.74