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Nesmith Corporation's outstanding bonds have a $1,000 par value, a 7% semiannual coupon, 11 years to...

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Finance

Nesmith Corporation's outstanding bonds have a $1,000 par value,a 7% semiannual coupon, 11 years to maturity, and an 11% YTM. Whatis the bond's price? Round your answer to the nearest cent.

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4.1 Ratings (748 Votes)

Par/Face value 1000
Annual Coupon rate 0.07
Annual coupon 70
semi-annual coupon 35
Present Value = Future value/[(1+(r/m))^mt]
r is the yield to maturity that is 11%.
m is the compounding period that is 2
mt is the time period.
price of the bond = sum of present values of future cash flows
r/2 0.055
mt 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
future cash flow 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 1035
present value 33.17536 31.44583 29.80648 28.25259 26.7797 25.3836 24.06029 22.80596 21.61702 20.49007 19.42187 18.40935 17.44962 16.53993 15.67766 14.86034 14.08563 13.35131 12.65527 11.99551 11.37016 318.7031
sum of present values 748.34
The bond's price is $748.3.

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Nesmith Corporation's outstanding bonds have a $1,000 par value,a 7% semiannual coupon, 11 years to maturity, and an 11% YTM. Whatis the bond's price? Round your answer to the nearest cent.

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