Question

Calculate the sale price for the following bond. The bond matures 6 years from now and...

  1. Calculate the sale price for the following bond. The bond matures 6 years from now and has a face value of $100,000.   The effective interest rate on the bond is 6%.   The bond has a stated interest rate of 9%. Interest payments are semiannual.
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Answer #1
Computation Of Bond Price
a Semi-annual Interest Amount $                 4,500.00
($100000*9%/2)
b PV Annuity Factor for (12 Years,3%) 9.954004
c Present Value Of Annual Interest (a*b) $              44,793.02
d Redemption Value $            100,000.00
e PV Factor Of (12 Years,3%) 0.70138
g Present Value Of Redemption Amount (d*e) $              70,137.99
f Price Of The Bond (c+g) $            114,931.01
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