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Bright Sun, Inc. sold an issue of 30-year $1,000 par value bonds to the public. The...

Bright Sun, Inc. sold an issue of 30-year $1,000 par value bonds to the public. The bonds had a 9.76 percent coupon rate and paid interest annually. It is now 9 years later. The current market rate of interest on the Bright Sun bonds is 8.90 percent. What is the current market price (intrinsic value) of the bonds?

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Answer #1

To find the current bond price, we need to put the following values in the financial calculator:

INPUT 30-9=21 8.90 9.76%*1,000=97.60 1,000
TVM N I/Y PV PMT FV
OUTPUT -1,080.50

So, the current market price (intrinsic value) of the bonds is $1,080.50

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