Question

You are considering a 20-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.

Years to maturity	20
Par value of bond	$1,000.00
Coupon rate	8.00%
Frequency interest paid per year	2
Effective annual rate	9.02%
Calculation of periodic rate:
Nominal annual rate
Periodic rate
Calculation of bond price:
Number of periods
Interest rate per period	0.00%
Coupon payment per period
Par value of bond	$1,000.00
Price of bond

If you require an "effective" annual interest rate (not a nominal rate) of 9.02%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent.

Answer 1

If you want me to do by hand . Do comment . I will. Since you have given a spreadsheet like format i did so.

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