A bond with a face value of ​$7 000 pays quarterly interest of 2.5 percent each period. 22 interest payments remain before the bond matures. How much would you be willing to pay for this bond today if the next interest payment is due now and you want to earn 6 percent compounded quarterly on your​ money?

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A:

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A: Bond price today = Bond price 3 years from now / (1 + Interest rate)^Time

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A: Working note:

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A: Present value of bond can be calculated by using this equation Present value =C1/(1+r) +C2/(1+r)2…

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A: Future Value = 7000 N = 10 Rate = 6%

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