Dufner Co. issued 15-year bonds one year ago at a coupon rate of 6.6 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.5 percent, what is the current dollar price assuming a par value of $1,000?

Question

Business

Clarissa Hamilton

4 February, 05:16

Dufner Co. issued 15-year bonds one year ago at a coupon rate of 6.6 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.5 percent, what is the current dollar price assuming a par value of $1,000?

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Answers (1)

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Zachary Young · Answer 1

The answer is $1,106.43

Explanation:

Number of years is 28years[ (15years - 1year) x 2]

Yield-to-maturity (YTM) is 2.75% (5.5% : 2)

Present value (PV) = ?

Payment coupon (PMT) = $33[ (6.6% : 2) x $1,000]

Future Value (FV) = $1,000.

Using a Financial calculator;

Present value is $1,106.43