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You are considering buying a bond with a 10-year maturity. The bond’s coupon rate is 8%...

You are considering buying a bond with a 10-year maturity. The bond’s coupon rate is 8% and the interest rate is paid semiannually. If youu want to earn an effective interest rate of 8.16%, how much should you be willing to pay for the bond? Where the par value is 1.000.000.000

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Answer #1
Par Value $               1,000,000,000.00
Coupon Rate = 8%/2 4%
Coupon Payment $                    40,000,000.00
Period = 10 x 2 20
YTM = 8.16%/2 4.08%
Current Price = PV(4.08%,20,-40000000,1000000000) $989,204,352.96

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