The bond's price is $909.26.
The Breakdown
To calculate the bond's price, we can use the present value formula for a bond:
Price = (C / (1 + r)¹) + (C / (1 + r)³) + ... + (C / (1 + r)^n) + (M / (1 + r)^n)
Where:
C = Annual coupon interest payment
r = Required interest rate (in decimal form)
n = Number of years until maturity
M = Par value of the bond
In this case:
C = $70
r = 8.0% = 0.08 (decimal form)
n = 9 years
M = $1,000
Plugging in the values into the formula:
Price = (70 / (1 + 0.08)¹) + (70 / (1 + 0.08)²) + ... + (70 / (1 + 0.08)⁹) + (1,000 / (1 + 0.08)⁹)
The bond's price would be:
Price ≈ $70 / (1 + 0.08)¹ + $70 / (1 + 0.08)² + ... + $70 / (1 + 0.08)⁹ + $1,000 / (1 + 0.08)⁹
Price ≈ $64.81 + $59.87 + $55.41 + $51.39 + $47.77 + $44.51 + $41.58 + $39.00 + $36.73 + $468.19
Price ≈ $909.26
Therefore, the bond's price is $909.26.