A $1,000 face value bond has a remaining maturity of 10 years and a
required return of 9%. The bond's coupon rate is 7.4%. What is the fair value of this bond?
Using a financial calculator:
Number of years (N) = 10, future value (FV) = 1000, interest rate (I/YR) = 9
To calculate the annual payment: 0.074 * 1000 = 74 = PMT (in calculator terminology)
After pressing CPT to compute the price of the bond, then press PV.
Therefore, the fair value of the bond is $897.32.
Please prepare response in Excel.© BrainMass Inc. brainmass.com June 3, 2020, 11:22 pm ad1c9bdddf
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