Question

Bond valuation Nesmith Corporation's outstanding bonds have a $1,000 par value, a 6% semiannual coupon, 16 years to maturity, and an 10.5% YTM. What is the bond's price? Round your answer to the nearest cent.

Answer 1

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =16x2

Bond Price =∑ [(6*1000/200)/(1 + 10.5/200)^k]     +   1000/(1 + 10.5/200)^16x2

k=1

Bond Price = 654.78