Nungesser Coporations outstanding bonds have a $1,000 parvalue a 9 per

QUESTION

Nungesser Coporations outstanding bonds have a $1,000 parvalue a 9 percent semiannual coupon, 8 years to maturity, andan 8.5 percent YTM. What is the bonds price?
Calculating Current MarketValue of the Bond : Yield to Maturity (r ) [8.5% / 2] 4.25% Semi-Annual Coupon Payment [$1,000 * 9%/2] $45 Number of years to Maturity (t) [ 8*2] 16 years Face Value of the Bond $1,000 Current Bond Value = C *[1-1/(1 r) t ] /r F/(1 r) t Current Bond Value = $45 *[1-1/(1 0.0425) 16 ] / 0.0425

0 /(1 0.0425) 16 Current Bond Value = $45 *[1-1/(1.0425) 16 ]/ 0.0425 $1,000 /(1.0425) 16 Current Bond Value = $45 * 11.44047 $513.787 Current Bond Value = $514.82 $513.787 Current Market value of the Bond =$1,028.60

ANSWER:

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