Determine the selling price PV, per $1,000 maturity value, of the bond. HINT [See Example 8.] (Assume twice-yearly interest paym

Question

3 years ago

12

ents. Do not round those payments to the nearest cent. Round your selling price PV to the nearest cent.) 20-year, 4.225% bond, with a yield of 4.23%

1 answer:

timofeeve [1] · Answer 1 · 2022-07-11T23:58:20+03:00

Answer:

$999.60

Explanation:

For computing the selling price i.e. present value we have to use the present value function i.e. shown below:

Given that

NPER = 20 × 2 = 40

PMT = $1,000 × 4.225% ÷ 2 = $21.125

RATE = 4.23% ÷ 2 = 2.115%

FV = $1,000

the formula is shown below:

PV =-PV(RATE;NPER;PMTFV;TYPE)

After applying the above formula, the present value is $999.60