George owns a custom pottery business where he makes all types of mugs and drinkware. Which of the following products would dram
1 answer:
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Answer:
present value = $848.29
so correct option is c) $848
Explanation:
given data
bond sold = $100 million
time = 6 year
future value = $1,000 par value
original maturity = 20 years
years to maturity left = 14 years
annual coupon rate = 11.5%
require return = 14%
to find out
what price would you pay today for a James bond
solution
we get here first interest amount that is
interest = future value × annual coupon rate × 0.5
interest = 1000 × 11.5% × 0.5
interest = $57.50
and rate =
rate = 7%
now we find present value by
PV(Rate,nper, pmt, FV)
PV ( 7%, 28, 57.50,1000)
present value = $848.29
so correct option is c) $848