Vulcan, Inc. has 8.8 percent coupon bonds on the market that have 7 years left to maturity. The bonds make annual payments and have a par value of $1,000. If the yield-to-maturity on these bonds is 10.8 percent, what is the current bond price?

Question

admin

11.07.2022 - 10:26

Vulcan, Inc. has 8.8 percent coupon bonds on the market that have 7 years left to maturity. The bonds make annual payments and have a par value of $1,000. If the yield-to-maturity on these bonds is 10.8 percent, what is the current bond price?

Question:

Vulcan, Inc. has 8.8 percent coupon bonds on the market that have 7 years left to maturity. The bonds make annual payments and have a par value of $1,000. If the yield-to-maturity on these bonds is 10.8 percent, what is the current bond price?

Answers (1)

Irma April 8, 2023 в 00:56

The current bond price can be calculated using the formula for the present value of a bond: PV = (C/R) x (1 - (1 + R)^-n) + (FV/(1 + R)^n) Where: C = annual coupon payment = 8.8% x $1,000 = $88 R = yield-to-maturity = 10.8% n = number of years to maturity = 7 FV = par value = $1,000 Plugging in the values, we get: PV = ($88/0.108) x (1 - (1 + 0.108)^-7) + ($1,000/(1 + 0.108)^7) PV = $667.86 Therefore, the current bond price is $667.86.

Do you know the answer?

Leave a comment Cancel Response

Not sure about the answer?

Find the right answer to the question Vulcan, Inc. has 8.8 percent coupon bonds on the market that have 7 years left to maturity. The bonds make annual payments and have a par value of $1,000. If the yield-to-maturity on these bonds is 10.8 percent, what is the current bond price? by subject Business, and if there is no answer or no one has given the right answer, then use the search and try to find the answer among similar questions.

Search for other answers

New questions in the category: Business

Calculate the Debt Ratio given that Total Assets is $1620 and Total Owners’ Equity is $1035. a. 36.11% b. 36.56% c. 37.03% d. 37.4%

Answers (0)

A tank of capacity 200 gallons holds 100 gallons of water with 25 pounds of sugar in solution. Pure water is poured into it at a rate of 2 gallons per minute, and the well stirred mixture flows out of this tank at a rate of

Answers (0)

List the basic steps in the recording process.

Answers (1)

Do independent contractors get overtime pay?

Answers (1)

Briefly distinguish between financial and managerial accounting as they relate to (i) the primary users, (ii) the type and frequency of reports, (iii) the purpose of reports, and (iv) the content of reports.

Answers (0)