Question

Using a financial calculator. Suppose you wish to purchase a bond. It has yearly payments of $50 for the next 8 years. If the bonds future value is $1000 (expires at par value) and the interest rate is 12% what is the present value of the bond? If the interest rate instead were 3% what would the present value be? How about if the interest rate is 5%?

Answer 1

For the 1st part we have PMT=50, N=8,I/Y=12%, FV=1000

First clear the memory using 2nd + Clr tvm

Then press 50 and PMT , 8 and N , I/Y and 12% and FV and 1000

Then press CPT and then PV

We will get PV = $ 652.27

For the 2nd part, press 50 and PMT , 8 and N , I/Y and 3% and FV and 1000

Then press CPT and then PV

We will get PV = $ 1140.39

For the 2nd part, press 50 and PMT , 8 and N , I/Y and 5% and FV and 1000

Then press CPT and then PV

We will get PV = $ 1000