Question

To conserve cash, Uber issued a zero coupon bond which has exactly 8 years to maturity....

To conserve cash, Uber issued a zero coupon bond which has exactly 8 years to maturity. If its current market rate is 8.5%, what is its current market price today?

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Answer #1

Information provided:

Par value= future value= $1,000

Time= 8 years

Current market rate= 8.5%

The current market price of the bond is calculated by computing the present value.

Enter the below in a financial calculator to compute the present value:

FV= 1,000

N= 8

I/Y= 8.5

Press the CPT key and PV to compute the present value.

The value obtained is 520.67.

Therefore, the current market price of the bond is $520.67.

In case of any query, kindly comment on the solution.

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