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Category > Business & Finance Posted 16 May 2017 My Price 12.00

Moerdyk Corporation's bonds have a 15-year maturity,

Task:

Moerdyk Corporation's bonds have a 15-year maturity, a 7.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 6.20%, based on semiannual compounding. What is the bondAc€?cs price?

Solution:

Par value = FV                                     $1,000

Coupon rate                                           7.25%

Periods/year                                                   2

Yrs to maturity                                             15

Periods = Years Af— 2 = N                               30

Going annual rate = YTM = rd               6.20%

Periodic rate = rd/2 = I/YR                     3.10%

Coupon rate Af— Par/2 = PMT                  $36.25

PV       $1,101.58


Question:

Please, explain in VERY DETAILED way how thw PV was calculated. Provide formula and substitute numbers from the task.

 

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Answers

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Status NEW Posted 16 May 2017 05:05 PM My Price 12.00

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