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g Boeing corporation issued a 25-year bond in 1999. The bond has a stated face value of $10,000 dollars and an annual coupon rate of 4.5%. Suppose you bought the bond in January of 1999 and would like to sell the bond in January 2023. The current interest rate on comparable bonds in January 2023is 6.25%. Calculate the price at whichyou could sell your bond.

Respuesta :

Answer:

price of bond in 2023 = $9835.29

Explanation:

given data

face value = $10,000

annual coupon rate = 4.5%

current interest rate = 6.25%

to find out

Calculate price at which you could sell your bond

solution

first we get here coupon payment that is express as

coupon payment = annual coupon rate × face value     ......................1

put here value

coupon payment = 4.5% × 10000

coupon payment = 450

so here price of bond in 2023 will be

price of bond in 2023 =  [tex]\frac{coupon\ payment}{1+current\ interest\ rate} +\frac{face\ value}{1+current\ interest\ rate}[/tex]      ..................2

put here value

price of bond in 2023 =  [tex]\frac{450}{1+0.0625} +\frac{10000}{1+0.0625}[/tex]

price of bond in 2023 = $9835.29

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