Question

A 3-year bond with 10% coupon rate and $1000 face value yields 8%. Assuming annual coupon payment, calculate the price of the bond.

Answer 1

Answer:

$1,051.54

Explanation:

The computation of the price of the bond is presented below that is attached in the spreadsheet

Data provided in the question:

Future value = $1,000

Rate of interest = 8%

NPER = 3 years

PMT = $1,000 × 10% = $100

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the price of the bond is $1,051.54