Question

Westco Company issued 15-year bonds a year ago at a coupon rate of 8.1 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.4 percent, what is the current bond price in dollars

Answer 1

Based on the information given the current bond price in dollars is: $1,155.66.

Current bond price

We would be using financial calculator to determine the current bond price by inputting this figures below.

Rate= 6.4%/2=3.2

nper: (15-1)×2=28

Pmt: -1000×8.1%/2=40.5

Fv=-1000

Pv=?

Hence:

Pv(rate; nper ;pmt; fv)

PV=$1,155.66

Inconclusion the current bond price in dollars is: $1,155.66.

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