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ABC Corporation just issued 10-year, $1,000 par value bonds, with a 9% coupon with interest paid annually. The current required rate of return (i.e., YTM) is 7.5%. The current price of the bonds is approximately:_______

Respuesta :

Answer:

The current price of the bonds is $1,102.96  

Explanation:

In arriving at the current price of the bonds, I discounted all future cash flows of the bonds into present value by multiplying the cash flows payable by the bond with relevant year discounting factor.

PV=FV/(1+r)^n

For detailed computation on the bonds current price find attached.

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