What is the value of a bond that matures in 35 years, makes an annual coupon pay
ID: 2701141 • Letter: W
Question
What is the value of a bond that matures in 35 years, makes an annual coupon payment of $110, and has a par value of $1000? Assume a required rate of return of 6%, and round your answer to the nearest $10.
$1,200
$1,280
$1,720
$1,430
What is the value of a bond that matures in 13 years, has an annual coupon payment of $85, and has a par value of $1000? Assume a required rate of return of 6.5%, and round your answer to the nearest $10.
$1,170
$1,330
$890
$1,000
$1,200
$1,280
$1,720
$1,430
What is the value of a bond that matures in 13 years, has an annual coupon payment of $85, and has a par value of $1000? Assume a required rate of return of 6.5%, and round your answer to the nearest $10.
$1,170
$1,330
$890
$1,000
Explanation / Answer
The correct answer is: $1,720
PV= 110PVIFA(6%,35)+1000PVIF(6%,35)
PV= $ 1724.91 or $1,720
The correct answer is: $1,170
PV= 85PVIFA(6.5%,13)+1000PVIF(6.5%,13)
PV= $1171.995 or $1,170
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