Question

The Sisyphean Company has a bond outstanding with a face value of $ 1 comma 000$1,000 that reaches maturity in 1515 years. The bond certificate indicates that the stated coupon rate for this bond is 8.98.9​% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 7.67.6​%, then the price that this bond trades for will be closest​ to:

Answer 1

$1,108.51

Step-by-step explanation:

For computing the price of the bond we need to apply the present value formula i.e to be shown in the attachment below:

Given that,

Future value = $1,000

Rate of interest = 7.67% ÷ 2 = 3.835%

NPER = 15 years × 2 = 30 years

PMT = $1,000 × 8.9% ÷ 2 = $44.5

The formula is shown below:

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

So, after applying the above formula, the price of the bond is $1,108.51