Ninja Co issued 19year bonds a year ago at a coupon rate of

Ninja Co. issued 19-year bonds a year ago at a coupon rate of 6.9 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.2 percent, what is the current bond price? Assume a face value of $1,000

Solution

Hi,

Please find the detailed answer as follows:

Nper = 18*2 = 36 (indicates the period)

PV = ? (indicates the price)

FV = 1000 (indicates the face value)

Rate = 5.2%/2 (indicates semi-annual YTM)

PMT = 1000*6.9%*1/2 = 34.5 (indicates the amount of interest payment)

Bond Price = PV(Rate,Nper,PMT,FV) = PV(5.2%/2,36,34.5,1000) = $1197.16

Thanks.