Question

Calculate the fair present values of the following bonds, all of which pay interest semiannually, have a face value of $1,000, have 10 years remaining to maturity, and have a required rate of return of 10 percent. The bond has a 5 percent coupon rate. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) The bond has a 7 percent coupon rate. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) The bond has a 10 percent coupon rate. (Do not round intermediate calculations.)

Answer 1

a). To find the current bond price, we need to put the following values in the financial calculator:

INPUT	10x2=20	10/2=5		(5%/2)x1,000=25	1,000
TVM	N	I/Y	PV	PMT	FV
OUTPUT			-688.44

Hence, Current Bond Price = $688.44

b). To find the current bond price, we need to put the following values in the financial calculator:

INPUT	10x2=20	10/2=5		(7%/2)x1,000=35	1,000
TVM	N	I/Y	PV	PMT	FV
OUTPUT			-813.07

Hence, Current Bond Price = $813.07

c). To find the current bond price, we need to put the following values in the financial calculator:

INPUT	10x2=20	10/2=5		(10%/2)x1,000=50	1,000
TVM	N	I/Y	PV	PMT	FV
OUTPUT			-1,000

Hence, Current Bond Price = $1,000