Bond Valuation(5-1) Jackson Corporation's bonds have 12 years remaining to maturity. Interest is paid annually,the bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield tomaturity of 9%. What is the current market price of these bonds?Answer:n= 12 years, Par Value = $1,000, Coupon Interest Rate = 8%, YTM = 9%Coupon Payment(I)Par Value of Bond x Coupon Interest Rate$1,000 x 8%$80Value of bonds (Vb)= $928.36By using financial calculator:Inputs:N= 12, I/Y = 9%,The current market of these bonds is $928.36(manual calculation) or $928.39 (financialcalculator).PMT = $80, FV = $1,000Output:PV = -$928.39

Par value of bond = $ 1000 Coupon rate = 8% Coupon amount = 1000*0.08 = $ 80 Years to maturity = 12…

Answered: (5-1) Jackson Corporation's bonds have…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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(5-1) Jackson Corporation's bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds?