Can You Determine The Value Of1000 Bond With A 7% Coupon Rate Maturing In 20 Years For Required Rate Return Is 8%?

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amber Jhon Profile
amber Jhon answered
The present value or the price of this bond will be $ 901.81. I have calculated it with a financial calculator. If you also want to calculate it manually then given below is the solution:

PV = Sum of cash flows
  (1 + I)n

PV =   0.07*1000   + 0.07*1000   + ...    1000
  (1 + 0.08)1     (1 + 0.08)2   (1 + 0.08)20     

PV = $ 901.81

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