Question

Lycan, Inc., has 7.9 percent coupon bonds on the market that have 6 years left to maturity. The bonds make annual payments and have a par value of $1,000. If the YTM on these bonds is 9.9 percent, what is the current bond price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current bond price

Answer 1

Answer:

$912.68

Explanation:

Particulars                      Time  PVF at 9.9%   Amount   Present Value

Cash Flows (Interest) 1.00        0.9099       79.00             71.88

Cash Flows (Interest)    2.00        0.8280       79.00             65.41

Cash Flows (Interest)    3.00        0.7534        79.00             59.52

Cash Flows (Interest)    4.00        0.6855        79.00            54.15

Cash Flows (Interest)    5.00        0.6238        79.00            49.28

Cash Flows (Interest)    6.00        0.5676        79.00            44.84

Cash flows (Maturity)    6.00        0.5676      1,000.00         567.60

Intrinsic Value of Bond or Current Bond Price                  $912.68

Thus, the Current bond price is $912.68