On December 31, 2004, $710,000 of 4% bonds were issued. The market interest rate at the time of issuance was 7%. The bonds pay interest on June 30 and December 31 and mature in 20 years.
- Compute the selling price of a single $1,000 bond on December 31, 2004.
Note: Round all intermediate calculations to three decimal places, and round your final answer to the nearest cent.
Please see the attached file to understand how the computations were completed. ...
This solution provides an explanation of how to calculate the selling price of a bond. An Excel spreadsheet is attached and can be used to understand how the values were found. By clicking directly onto the cells of the spreadsheet, it shows which functions were used to find the values derived.