bond pays $5000 in 25 years an earns an annual interest rate of 4.75%. What is the bond's price? Assume annual compounding. Round your answer to two decimal places. Do not include the dollar sign or negative sign (if applicable).

bond pays $5000 in 25 years an earns an annual interest rate of 4.75%. What is the bond's price? Assume annual compounding. Round your answer to two decimal places. Do not include the dollar sign or negative sign (if applicable).

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 11P

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Question

bond pays $5000 in 25 years an earns an annual interest rate of 4.75%. What is the bond's price?

Assume annual compounding. Round your answer to two decimal places. Do not include the dollar sign or negative sign (if applicable).

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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