Question

Determine the amount you would be willing to pay (the present value) for a $1,000 par value bond paying $90 interest each year (annual) and maturing in 12 years, assuming you wanted to earn a 10% rate of return. Fill out the table below and check your answer with the financial calculator.

12 year Bond -->				10.0000%
				Present
Time	Interest	Maturity	Total	Value of
	Payment	Payment	Cash Flow	Cash Flow
1	90	0	90.00
2
3
4
5
6
7
8
9
10
11
12
Total present value ----------------------------------->

                                 I would be willing to pay the present value above

Answer 1