Question: Calculate the present value of a bond that pays a coupon rate of 7% per year for 20 years, and matures in 20 years at its face value of $1000, using each of the following current market interest rates at the discount rates of:(a) 5%; (b) 7%; (c) 9%. Show your calculations.© BrainMass Inc. brainmass.com June 3, 2020, 11:10 pm ad1c9bdddf
Annual Coupon amount=C=1000*7%=$70
Number of coupon payments=n=20
Maturity amount=Face Value=M=$1000
a) Discount rate=r=5%
Present value of ...
In an organized and step-wise manner this solution describes the steps required to calculate the present value of a bond at various discount rates. All calculations have been provided.