Yantai Food, Inc. has issued a bond with par value of $1,000, a coupon rate of 9 percent that is paid semi-annually, and that matures in 10 years. What is the value of the bond if the required rate of return is 12 percent?
What will be an ideal response?
Coupon payment = 1,000 × 0.09 = $90
Semi-annual coupon payment = 90/2 =$45
Using financial calculator: PMT= 45, I=6, N=20, FV=1000, CPT PV = $827.95
Business
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