Haswell Enterprises' bonds have a 10year maturity, a 6.25% semiannual coupon, and a par value of $1,000. The going interest rate (r_{d}) is 5%, based on semiannual compounding. What is the bond's price?
Select the correct answer.









Information provided:
Par value= future value= $1,000
Time= 10 years*2= 20 semiannual period
Coupon rate= 6.25%/2= 3.1250%
Coupon payment= 0.03125*1,000= $31.25
Required rate of return= 5%/2= 2.50%
The price of the bond is calculated by computing the present value of the bond.
Enter the below in a financial calculator to compute the present value:
FV= 1,000
PMT= 31.25
N= 20
I/Y=2.5
Press the CPT key and PV to compute the present value.
The value obtained is 1,097.43.
Therefore, the bond’s price is $1,097.43.
Hence, the answer is option b.
In case of any query, kindly comment on the solution.
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