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Bond Maturity

Please include any formulas if applicable (so I can do more practice problems)

How much should you pay for a $1,000 bond with 10% coupon, annual payments, and five years to maturity if the interest rate is 12%

Solution Preview

Face Value = 1000
Coupon Rate = 10%
So annual payment = .10 X 1000 = 100
Interest Rate = 12%

If you want to use a financial calculator, all you have to do is plug in the above values and ...

Solution Summary

The solution determines the price (or present value) of the bond.

$2.19