Home Grades Personalized Reviews Discussion Course Materials

Home Grades Personalized Reviews Discussion Course Materials inal Exam - Chapters 7-11, 14,16 ime Remaining: 91 minutes Back to Assignment Deadline Today at 09:00 PM Toyoda Motor\'s bonds have 8 years remaining to maturity Interest is paid annually, they have a $1,000 par value; the coupon interest rate is 8%, and the yield to maturity is 9.5%. What is the bond\'s current market price? O A. 935.82 B. 950.65 O C. 1045.05 OD. 918.5 Continue without saving Copyright Notices Terms of UsePrivacy Notice Security Notice Accessibility

Solution

Correct option is > D. $918.50

Using financial calculator BA II Plus - Input details:

#

I/Y = Yield = Rate = YTM =

9.50

FV = Future Value =

-$1,000

N = Number of coupon payments =

8

PMT = Payments = FV x Coupon rate =

-$80.00

CPT > PV = Present Value of bond =

$918.50

Or

Bond value = PMT x ((1-((1+Rate)^-N)) / Rate) + (FV/(1+Rate)^N)

Bond value = 80 x ((1-((1+9.5%)^-8)) / 9.5%) + (1000/(1+9.5%)^8)

Bond Value = $918.50

Using financial calculator BA II Plus - Input details:	#
I/Y = Yield = Rate = YTM =	9.50
FV = Future Value =	-$1,000
N = Number of coupon payments =	8
PMT = Payments = FV x Coupon rate =	-$80.00
CPT > PV = Present Value of bond =	$918.50