Map Sapling Learning Nickis considering investing in two ear

Map Sapling Learning Nickis considering investing in two ear 10,000 bond pa nga coupon rate of 4%. The market interest rate is 5%. Calculate the present value(PV) of the bond and enter it below. Number

Solution

Face value of the bond = $10,000

Coupon rate = 4%

Coupon payment = $10,000 * 0.04 = $400

Market interest rate = 5%

Time period = 2 years

Calculate the present value of the bond -

PV = $400(P/A, 5%, 2) + $10,000(P/F, 5%, 2)

PV = ($400 * 1.8594) + ($10,000 * 0.9070)

PV = $743.76 + $9,070

PV = $9,813.76

The Present Value (PV) of the bond is $9,813.76