Determine total expenditure, Finance Basics

Determine the amount you would be willing to pay for a $1,000 par value bond paying $80 interest each year (annual) and maturing in 12 years, assuming you wanted to earn a 9% rate of return. 


Interest per year


 mce_markernbsp;                              80.00


Years to maturity




Par value


 mce_markernbsp;                        1,000.00


Required rate of return




Intrinsic value of bond


 mce_markernbsp;                           928.39


($1000/1.09^12 + $80 x PVIFA(12,9%)




Posted Date: 7/23/2012 2:05:48 AM | Location : United States

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