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 as the discount rate:(a) 5%; (b) 7%; (c) 9%. Show your calculations.© BrainMass Inc. brainmass.com December 20, 2018, 5:00 am ad1c9bdddf
The present value of the bond is the present value of interest and principal discounted at the given rate. The annual interest is $70 and is an annuity and so we use the PVIFA table to ...
The solution explains how to calculate the current value of a bond.