Question

Ping Corporation's outstanding bonds have a $1,000 par value, a 12 percent semiannual coupon, 8 years to maturity, and a 7.5 percent YTM. What is the bond's price?

Answer 1

F = Face value =	$1,000.00
C = Coupon rate = 12%/2 =	6.00%
R = Yield = YTM/2 = 7.5%/2 =	3.75%
N = Number of coupon payments till maturity = 8 x 2 =	16
Formula for bond value = (C x F x ((1-((1+R)^-N)) / R) + (F/(1+R)^N)
Bond Value = (6%*1000*((1-((1+3.75%)^-16))/3.75%)+(1000/(1+3.75%)^16))
Bond value or price =	$1,267.08

Alternate method:

Using financial calculator BA II Plus - Input details:	#
I/Y = Rate or yield =	3.75
PMT   =	-$60.00
N =	16
FV =	-$1,000.00
CPT > PV = Bond Value =	$1,267.08