Problem: 7-3Bond ValuationNungesser Corporations outstanding bonds hav

QUESTION

Problem: 7-3Bond ValuationNungesser Corporations outstanding bonds have a $1,000 parvalue, a 9% semiannual coupon, 8 years to maturity, and an 8.5%YTM. What is the bonds price?Problem 7-18Bond Returns: This answer is in the back of the bookbut I dont just want that, I need to know how to get the a
Par Value of theBond $1,000 Semiannula Coupon (9% / 2) 4.5% Nubmer of years toMaturity 8 years Rate of Return (YTM) [8.5% /2] 4.25% Calculating BondPrices: BondValue = Present Value of the Coupons Present Value ofthe Face Amount Bond Value = C *[1-1/(1 r) t ]/r F /(1 r) t Bond Value= [$1,000 * 4.5%] * [1-1/(1 0.0425) 8*2 ]

.0425 $1,000 / (1 0.0425) 8*2 Bond Value = $45 *[1-1/(1.0425) 16 ] / 0.0425 $1,000 /(1.0425) 16 Bond Value = $45 *11.440306 [$1,000 / 1.946332427] Bond Value = $514.81 $513.78 Bond Value= $1,028.59 Hope it may help you

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