Final answer:
The price of Nesmith Corporation's bond is $876.42.
Step-by-step explanation:
The price of Nesmith Corporation's bond can be calculated using the present value formula. The bond has a par value of $1,000, a semiannual coupon rate of 8%, 14 years to maturity, and a yield to maturity of 11%. To calculate the present value of the bond, we need to discount the future cash flows using the yield to maturity as the discount rate. Considering semiannual coupon payments, the bond price can be calculated as:
Bond price = (Coupon payment / Yield to maturity) * (1 - (1 / (1 + Yield to maturity)^n))/ (Yield to maturity / 2) + (Face value / (1 + Yield to maturity)^n)
Plugging in the values, the bond price comes out to be $876.42. Therefore, the correct option is B. $876.42.