Question

Acme Corp issued 1,500 bonds (face value $1,000 each) with coupon rate of 12% per annum...

Acme Corp issued 1,500 bonds (face value $1,000 each) with coupon rate of 12% per annum on December 31, 2019. These bonds mature on December 31, 2039 and pay interest semi-annually on June 30 and December 31.
Find the issuance price of the bonds assuming market rate of interest is 16%.
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Answer #1
C = coupon payment = $120.00 (Par Value * Coupon Rate)
n = number of years = 20
i = market rate, or required yield = 16.000% = 0.16
k = number of coupon payments in 1 year = 2
P = value at maturity, or par value = 1000


Issue price = $ 761.51
refer image for formula and its solution.

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