Determine total expenditure, Finance Basics

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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.

a	Interest per year	mce_markernbsp; 80.00
b	Years to maturity	12
c	Par value	mce_markernbsp; 1,000.00
d	Required rate of return	9%
e	Intrinsic value of bond	mce_markernbsp; 928.39
	($1000/1.09^12 + $80 x PVIFA(12,9%)

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