Question

Dufner Co. issued 15-year bonds one year ago at a coupon rate of 4.8 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.3 percent, what is the current dollar price assuming a $1,000 par value

Answer 1

$951.02

Step-by-step explanation:

We use the present value formula that is shown on the attachment. Kindly find it below:

Data given in the question

Future value = $1,000

Rate of interest = 5.3% ÷ 2 = 2.65%

NPER = 15 years - 1 year × 2 years = 28 years

PMT = $1,000 ×4.8% ÷ 2 = $24

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the present value is $951.02