Bam ell Corp purchased 10 $1,000 5% bonds of Galvan Corporation when the market

Question

Bam ell Corp purchased 10 $1,000 5% bonds of Galvan Corporation when the market rate of interest was 12%. Interest is paid sem annually on the bonds, and the bo mature in nine years. s il Using the PV function in Excefcompute the price Barnwell paid (the present value) on the bond investment. (Assume that all payments of interest and principal occur at the end of the period. Round your answer to the nearest cent.) Barnwell paid S on the bond investment Enter your answer in the answer box and then click Check Answer Clear Al Final Check Previous Next .

Explanation / Answer

Semiannual interest per bond : 1000 *.05 *6/12= 25

semiannual months :9*2=18

semiannual market yield :12*6/12=6%

Price per bond : [PVA 6%,18 * Interest ]+[PVF 6%,18* Face value]

           = [10.82760*25]+[.35034*1000]

           = 270.69+ 350.34

            = $ 621.03 per bond

Amount paid by Barnwell : 621.03*10 bonds =$ 6210.3   

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.