What is the market value of the following bond Coupon 8 Matu

What is the market value of the following bond?

Coupon 8%

Maturity date 2038

Interest paid semiannually

Par Value $1000

Market interest rate 10%

**I need every step of solving this problem in detail**

Solution

Date of issuance is not given: Assuming 25 years to maturity (issued in 2013) Input Annual Coupon Rate 8.00% Par value $1,000 Market Interest Rate 10.00% Semi annual coupon rate 4.00% [8% / 2] Semi annual market rate 5.00% [10% / 2] Number of years               25 Semi annual periods               50 Output Market value = Present value of coupon payments + Present value of maturity value Market value = {PVIFA (5%,50) x ($1,000 x 4%)} + PV (5%,50) x $1,000 Market value = (18.25593 x $40) + (0.08720 x $1,000) Market value = $730.24 + $87.20 Market value = $817.44 PVIFA Table http://www.principlesofaccounting.com/ART/fv.pv.tables/pvofordinaryannuity.htm PV Table http://www.principlesofaccounting.com/ART/fv.pv.tables/pvof1.htm