Bond Value Midland Oil has 1000 par value bonds outstanding

Bond Value

Midland Oil has $1,000 par value bonds outstanding at 8 percent interest. The bonds will mature in 25 years. Compute the current price of the bonds if the present yield to maturity is:

a. 7 percent.

b. 10 percent.

c. 13 percent.

PAR VALUE OF BOND $ = B = 1000 INTEREST RATE % = Ri= 8 OR COUPON RATE = Rc 0.08 PERIOD TO MATURITY YRS. = Y= 25 YIELD TO MATURITY = YTM = R IN FRACTION CURRENT PRICE OF BONDS $ = P = ? COUPON PAYMENT = C = B*Rc= 80 FORMULA P = C*[ {1/(1+R)} + { 1/(1+R)^2} +

Bond Value Midland Oil has $1,000 par value bonds outstanding at 8 percent interest. The bonds will mature in 25 years. Compute the current price of the bonds i

Bond Value Midland Oil has 1000 par value bonds outstanding

Solution

Get Help Now

Submit a Take Down Notice