# Bond Value : Solution set

$1,000 par value bond outstanding that pays 9 percent annual interest. The current yield to maturity on such bonds in the market is 12 percent. Compute the price of the bonds for these maturity dates:

30 years

15 years

1 year

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#### Solution Preview

$1,000 par value bond outstanding that pays 9 percent annual

interest. The current yield to maturity on such bonds in the market is 12 percent.

Compute the price of the bonds for these maturity dates:

30 years

15 years

1 year

To calculate the price of the bond we need to calculate / read from tables the values of

PVIF= Present Value Interest Factor

PVIFA= Present Value Interest Factor for an Annuity

Price of bond= PVIF * Redemption value + PVIFA * interest payment per period

PVIFA( n, r%)= =[1-1/(1+r%)^n]/r%

PVIF( n, r%)= =1/(1+r%)^n

No of years to maturity= 30

Price of bond

Coupon ...

#### Solution Summary

The solution calculates price of bonds for different maturity dates, given annual interest and the current yield to maturity.