Calculate the value of a bond that matures in 19 years and has a $1,000 par value. The annual coupon interest rate is 14 percent and the market's required yield to maturity on a comparable-risk bond is 11 percent.

Calculate the value of a bond that matures in 19 years and has a $1,000 par value. The annual coupon interest rate is 14 percent and the market's required yield to maturity on a comparable-risk bond is 11 percent.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter11: Bond Pricing And Amortization (bonds)

Section: Chapter Questions

Problem 8R: a. Reset the Data Section to its initial values. The price of this bond is 1,407,831. What would it...

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Part 1

(Related to Checkpoint 9.3) (Bond valuation) Calculate the value of a bond that matures in

years and has a

$1,000

par value. The annual coupon interest rate is

percent and the market's required yield to maturity on a comparable-risk bond is

percent.

Question content area bottom

Part 1

The value of the bond is

$enter your response here.

(Round to the nearest cent.)

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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