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Moerdyk Corporation's bonds have a 15-year maturity, a 7.25% annual coupon rate, and a par value of $1,000. The discount rate is 7.50%, based on semiannual compounding. What is the bond’s price?

Respuesta :

beritop1089

Answer:

$977.93

Explanation:

This is a coupon paying bond. Using a financial calculator, input the following;

Time to maturity; N = 15

Coupon payment; PMT = 7.25% *1000 = 72.5

Face Value; FV = 1,000

Annual interest rate; I/Y = 7.5%

then compute the price of the bond, a.k.a present value; CPT PV = 977.93

Therefore, the price of the bond today is $977.93

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