Question

Cardinal Health bonds have an annual coupon rate of 3.4 percent and a par value of $1,000 and will mature in 7 years. If you require a 5 percent return, what price would you be willing to pay for a Cardinal bond

Answer 1

• The answer is "$716.56", and the further calculation can be defined as follows:
• Health care business, Cardinal Health Leading provider healthcare, and biopharmaceutical products and services that help pharmacists.
• The healthcare providers impact on customer care whilst reducing costs, improving productivity, or increasing productivity.

Annual coupon to be paid$\bold{= \ 1000 \times 3.4\%= \ 1000 \times \frac{3.4}{100} = \ 34}$

years = 7

Calculating the bond price:

$= \ 1000 \times PVF(5\%, 7\ years) +\ 34 \times PVAF(5\%, 7\ years) \\\\= \ 1000 \times 0.71068 +\ 34 \times 0.17282\\\\= \ 710.68 + \ 5.87588\\\\= \ 716.55588\\\\= \ 716.56$

So, the final answer is "$716.56".

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