Question

Flower Valley Company bonds have a 14.87 percent coupon rate. Interest is paid semiannually. The bonds...

Flower Valley Company bonds have a 14.87 percent coupon rate. Interest is paid semiannually. The bonds have a par value of $1,000 and will mature in 5 years from now. Compute the value of Flower Valley Company bonds if investors’ required rate of return is 9.39 percent. Round the answer to two decimal places.

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Answer #1
Value of Flower Valley Company bonds is $ 1,214.74
Working:
Value of Flower Valley Company bonds = =-pv(rate,nper,pmt,fv)
= $ 1,214.74
Where,
rate Required rate of return = 9.39%/2 = 0.04695
nper Number of period = 5*2 = 10
pmt Semi annual coupon paid in cash = 1000*14.87%*6/12 = $       74.35
fv Par Value = = $ 1,000.00
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