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16 January, 18:10

XYZ Corp. has a bond issue with a $ 1,000 par value and a 15% coupon rate. It pays interest annually and has 15 years remaining to maturity. It just made a coupon payment (i. e., it has 15 coupon payments left to make). If the yield to maturity of bonds with similar risk and maturity is 10%. What the price of XYZ's bond today? Round your final answer to two decimals.

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  1. 16 January, 18:21
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    Answer:Bond Present Value = $1380.30

    Explanation:

    Future value (FV) = $1000

    coupon rate/interest rate (r) = 15%

    maturity (n) = 15

    yield/required return = 10%

    Bond Present Value = FV / (1 + r) ^n + p (1 - (1 + r) ^-n)) / r

    Bond Present Value = 1000 / (1 + 0.10) ^15 + 150 (1 - (1 + 0.10) ^-15) / 0.10

    Bond Present Value = 239.39204937 + 1140.9119259

    Bond Present Value = 1380.3039753

    Bond Present Value = $1380.30
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Home » Business » XYZ Corp. has a bond issue with a $ 1,000 par value and a 15% coupon rate. It pays interest annually and has 15 years remaining to maturity. It just made a coupon payment (i. e., it has 15 coupon payments left to make).
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