Question

***Note need answer using Excel and also tell what function you used (PMT, PRICE, etc.) and under WHAT CATEGORY i.e. FINANCE

Listing a bunch of numbers for financial calculators is not a help, I use EXCEL only for these. Thanks!

Haswell Enterprises' bonds have a 10-year maturity, a 6.25% semiannual coupon, and a par value of $1,000. The going interest rate (r_d) is 10.5%, based on semiannual compounding. What is the bond's price?

Select the correct answer.

a. $735.42

b. $740.70

c. $732.78

d. $730.14

e. $738.06

Answer 1

Solution :-

Semiannual Interest Rate ( Rate ) = 10.5% / 2 = 5.25%

Semiannual Periods ( Nper ) = 10 * 2 = 20

Face Value of Bond ( FV ) = $1,000

Semiannual Coupon Amount ( Pmt ) = $1,000 * 6.25% * 6 / 12 = $31.25

Now to calculate Bond Price , we use function PV

Therefore Price of Bond = $740.70

Therefore Correct Answer is (B)

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