Question

Regeneron Pharmaceuticals Inc issues a 4 percent coupon bond with 18 years maturity, $1,000 face (par) value, and semi-annual payments. If the yield to maturity of this bond is 10 percent, find the bond's price.

Answer 1

$503.59

Step-by-step explanation:

For computing the price of the bond we need to applied the present value formula which is to be shown in the attachment below:

Provided that

Future value = $1,000

Rate of interest = 10% ÷ 2 = 5%

NPER = 18 years × 2 = 36 years

PMT = $1,000 × 4% ÷ 2 = $20

The formula is shown below:

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

So, after applying the above formula, the bond price is $503.59