Calculate: Market Value of a Bond
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Scenario: On April 15, 2011, Melissa purchased $30,000 of Verbecke Co.'s 12%, 20-year bonds at face amount. Verbecke Co. has paid interest due on the bonds regularly. On April 15, 2015, market interest rates had risen to 14% and Melissa is considering selling the bonds. Using the present value tables in Chapter 6 of the textbook, calculate the market value of Melissa's bonds on April 15, 2015.
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This solution provides a step by step guide which shows how to calculate the market value of a bond. An Excel attachment file is also provided.
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On April 15, 2011, Melissa purchased $30,000 of Verbecke Co.'s 12%, 20-year bonds at face amount. Verbecke Co. has paid interest due on the bonds regularly. On April 15, 2015, market interest rates had risen to 14% and Melissa is considering selling the bonds. Using the present value tables in Chapter 6 of the textbook, calculate the market value of Melissa's bonds on April 15, 2015.
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