Question

9) . Homer's Trucking Company bonds have a 11% coupon rate with semi-annual coupon payment. The...

9) . Homer's Trucking Company bonds have a 11% coupon rate with semi-annual coupon payment. The bonds have a par value of $1,000 and will mature 2 years from now. Compute the value of Homer's Trucking Company bonds if investors' required rate of return is 9.5%. (Using the formula instead of using the financial function on your calculator) A) $1,197.27 B) $1,133.05 C) $1,098.99 D) $1,026.75 Please provide the Formula used to solve the problem!

Homework Answers

Answer #1
n = 4
I = 4.75%
Amuont Factor Present value
Interest $            55      3.5666 $               196.17
Principal $       1,000      0.8306 $               830.58
Value of bond $    1,026.75
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