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Your company issues 6% coupon bonds with a face value of $1,000.  Suppose these bonds have 7 years to maturity, make semiannual payments, and have a yield to maturity of 8%.

6a.  What is the current price of the bonds?

Apr 5th, 2015

Present Value of Interest Payments = c × F × 1 − (1 + r)-t+Fr(1 + r)t


6%*1000*((1-(1+8%)^-7 )/8% +1000/(1+8%)^7

60*((1-(1+8%)^-7 )/8% +1000/(1+8%)^7

35,354.22

Apr 5th, 2015

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