Question

What would you pay for a $180,000 debenture bond that matures in 15 years and pays $9,000 a year in interest if you wanted to earn a yield of:
2%, 3%, 4%?

Answer 1

2%
	Amount	PV factor	Present value
Annual interest	9000	12.84926	115643
Principal	180000	0.74301	133742
Amount to be paid			249385
3%
	Amount	PV factor	Present value
Annual interest	9000	11.93794	107441
Principal	180000	0.64186	115535
Amount to be paid			222976
4%
	Amount	PV factor	Present value
Annual interest	9000	11.11839	100066
Principal	180000	0.55526	99947
Amount to be paid			200012	or 200013
Note: Final answer may vary +1