A Hospital plans on issuing a tax-exempt bond at 6% coupon annual rate that matures at 30 years, the the par value of the bond is $1,000.
If required market rates are 6 percent, what is the value of the bond?
If required market rates fall to 12 percent what is the value of the bond?
At what required market rate (3,6, or 12 percent) does the above bond sell at a discount? At a premium?
When market rates are at the coupon rate, it sell at par ($1,000). When the market rate is below the ...
Your solution shows in Excel (attached) how to price a bond given different rates of market interest. The premium and discount aspects are explained.