Question

A three-year bond with 10 percent coupon rate and $1,000 face value yields 8 percent. Assuming annual coupon payments, calculate the price of the bond.

Answer 1

$1,051.54

Step-by-step explanation:

The price of the Bond is its Present Value and is calculated as follows :

FV = $1,000

PMT = ($1,000 × 10 %) = $100

i = 8

P/yr = 1

N = 3

PV = ?

Using a financial calculator to input the values as above, the price of the Bond is $1,051.54