Question

Petty Productions Inc. recently issued 30-year $1,000 face value, 12% annual coupon bonds. The market discount rate for this bond is only 7%. What is the current price of this bond?

Answer 1

The correct answer is $1,620.45

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

Time period (Nper) = 30 years

Face value (FV) = $1,000

Rate (r) = 7%

Coupon payment = $1,000 × 12% = $120

So, by putting all these in the financial formula, we get

The attachment is attached below.

So, the current price of the bond is $1,620.45.