A firm wants to issue a 5 year bond with a coupon rate of 8% yield to maturity of 6%, and interest payments made semi-annually.
1) At what price will the firm be able to sell the bond?
2) How many bonds must the firm sell to raise $1,000,000 in capital?© BrainMass Inc. brainmass.com June 3, 2020, 7:01 pm ad1c9bdddf
1) At what price will the firm be able to sell the bond?Â Â
Price of Bond= Present Value of Inflows=341+744= $1085
For workings see below:
Present value of inflows = Present value of ...
This provides the steps to calculate the Price of the bond.