A 10-year corporate bond with a total face value of $25,000,000
and a stated coupon rate of 7.9% APR
payable semi-annually was issued at a price to yield a return of
8.4% to investors. What was the
proceeds from the sale of the bond and the quoted bond price at
issuance?
N:
I/Y:
PV:
PMT:
FV:
Mode:
Excel Formula:
Bond Proceeds:
Answer:
N = 10*2=20
I/Y = 8.4%/2=4.2%
PMT = 7.9%*25,000,000/2 = 987,500
FV = 25,000,000
EXCEL Formula = PV(4.2%,20,-987500,-25000000) = 24,165,451.04
Bond Proceeds = 24,165,451.04
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