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Compute the price of a 5.4 percent coupon bond with 10 years left to maturity and a market interest rate of 8.6 percent. (Assume interest payments are semiannual.)

Respuesta :

Answer:

$788.22

Explanation:

We use the PV function that is reflected on the spreadsheet below. Kindly find the attachment

Provided that,  

Assuming the Future value = $1,000

Rate of interest = 8.6%  ÷ 2 = 4.30%

NPER = 10 years × 2 = 20 years

PMT = ($1,000 × 5.4%) ÷ 2  = $27

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the price of the bond is $788.22

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