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Summit Investment Consulting is considering purchasing $2,250,000 in face value of Gianna Enterprises' 10-year, 5.15% bonds...

Summit Investment Consulting is considering purchasing $2,250,000 in face value of Gianna Enterprises' 10-year, 5.15% bonds currently offered at a yield to maturity of 5.70%. The cost of the bonds is closest to:

A. $2,104,537.

B. $2,344,864.

C. $2,156,656.

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Homework Answers

Answer #1
Face value           2,250,000
Coupon rate 5.15%
Coupon payment              115,875
Years to maturity                         10
Yield to maturity 5.70%
Cost of bonds $2,157,610

From the options given we can see that option C.$2,156,656 is closest to the answer.

Excel formulas:

If you need the formula method, then let me know in the comments.

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