Question

Lycan, Inc., has 8 percent coupon bonds on the market that have 8 years left to maturity. The bonds make annual payments and have a par value of $1,000. If the YTM on these bonds is 10 percent, what is the current bond price

Answer 1

The present value is $893.30

Step-by-step explanation:

The computation of the current bond price is shown below:

Here we have to use the present value formula which is given below:

Given that

RATE = 10%

NPER = 8

PMT = $1,000 × 8% = $80

FV = $1,000

The formula is

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

After applying the above formula in an excel , the present value is $893.30

And, the same is to be considered