Mannings Co. has 7% coupon bonds on the market that has 10 years left to maturit

Question

Mannings Co. has 7% coupon bonds on the market that has 10 years left to maturity. The bonds make annual coupon payments. If the YTM on these bonds is 8%, what is the current bond price? Mannings Co. has 7% coupon bonds on the market that has 10 years left to maturity. The bonds make annual coupon payments. If the YTM on these bonds is 8%, what is the current bond price? Mannings Co. has 7% coupon bonds on the market that has 10 years left to maturity. The bonds make annual coupon payments. If the YTM on these bonds is 8%, what is the current bond price?

Explanation / Answer

932.899

Assuming the par value of the bond is $1000

r is the interest rate prevailing in the market, c is the coupon rate on the bond, t is the time periods occurring over the term of the bond and F is the face value of the bond

Present Value of Interest Payments = c × F × 1 (1 + r)-t + F r (1 + r)t

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