A firm has an issue of $1000 par value bonds with a 11 percent coupon. The issue

Question

A firm has an issue of $1000 par value bonds with a 11 percent coupon.  The issue pays interest annually and has 10 years remaining to its maturity date.  If bonds of the same risk are currently earning 7.9 percent, what is the price of the bond? Round it two decimial places, and do not include the $ sign, e.g., 935.67. A firm has an issue of $1000 par value bonds with a 11 percent coupon.  The issue pays interest annually and has 10 years remaining to its maturity date.  If bonds of the same risk are currently earning 7.9 percent, what is the price of the bond? Round it two decimial places, and do not include the $ sign, e.g., 935.67.

Explanation / Answer

price of the bond = 110/(1+7.9%) + 110/(1+7.9%)^2 + 110/(1+7.9%)^3 .....110/(1+7.9%)^10=

$1,208.95

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