Question

App Store Co. issued 25-year bonds two years ago at a coupon rate of 4.70 percent....

App Store Co. issued 25-year bonds two years ago at a coupon rate of 4.70 percent. The bonds make semiannual payments.

  

Required:

If the YTM on these bonds is 5.25 percent, what is the current bond price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
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Answer #1

Value of Bond =

Where r is the discounting rate of a compounding period i.e. 5.25%/2 = 2.625% _ _ (Semi Annual)

And n is the no of Compounding periods 23 years * 2 = 46 periods_ _ (Semi Annual )

Coupon 4.70%/2 = 2.35%

  

=

= 623.4100987 + 303.63663791

= 927.05

Value of Bond = $ 927.05

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