Video Excel Online Structured Activity: Bond valuation You are considering a 25-

Question

Video Excel Online Structured Activity: Bond valuation You are considering a 25-year, $1,000 par value bond. Its coupon rate is 9%, and interest ispaid semiannually. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet If you require an-effective" annual interest rate (not a nominal rate) of 10.72%, how much should you be to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent. Check My Work Reset Problem Next Back

Explanation / Answer

A) Calculation of periodic rate Formulas Nominal Rate 10.45% Nominal(10.72%,2) Periodic Rate 5.22% 10.45%/2 Calculation of Bond Price Number of Period (25 x 2) 50.00 Interest Rate 5.22% Coupon Payment = $1000 x 9%/2 $45.00 Par value $1,000.00 Bond's Price $872.34 PV(5.22%,50,-45,-1000)

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