Prishhalsky Prishhalsky

07-03-2017
Business

contestada

Grossnickle corporation issued 20-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. today, the market interest rate on these bonds is 5.5%. what is the current price of the bonds, given that they now have 19 years to maturity?

Respuesta :

gone530 gone530

16-03-2017

Bond valuation:
Par value = Maturity value = FV = $1,000
Coupon rate = 7.5%
Years to maturity = N = 19
Required rate = I/YR = 5.5%
(Coupon rate)(Par value) = PMT = $75
PV = $1,232.15

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