Question

Jackson Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 7%. What is the current market price of these bonds? Round your answer to the nearest cent.

Answer 1

Calculation of Current Market price of Band Current Market price of the Bond is the Present Value of future Cash flaw's ( Interest and Maturity Value) from the Band Discounted Using appropriate discounting Rate (Yield to Maturity Rate = 71.).

Grinen Interest 8 so ويملرنC year Coupon Interest 8% Par Value of Bond = 1000 Interest paid Annually = $ 80 ($1000x87.) for s Lear's Pv = 114 enfrentant les Year Cashflaus Present Vaule @ 74. cin $) 80 74.77 ((1+071) 69.88 65.30 con 7) 80 61.03 lut 074) .80 57.04. 1000 712.98 liten) Maturity value Total Present Value = $ 1041.00 Current Market Price of Bond is $1041.00 80