The Florida Investment Fund buys 94 bonds of the Gator Corporation through a bro

Question

The Florida Investment Fund buys 94 bonds of the Gator Corporation through a broker. The bonds pay 10 percent annual interest. The yield to maturity (market rate of interest) is 12 percent. The bonds have a 20-year maturity. Use Appendix B and Appendix D. Using an assumption of semiannual interest payments:

Compute the price of a bond. (Round "PV Factor" to 3 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.)

Compute the total value of the 94 bonds. (Round "PV Factor" to 3 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.)

Compute the price of a bond. (Round "PV Factor" to 3 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.)

Explanation / Answer

Hi,

Please find the answer as follows:

Part A = PV(Rate,NPer,PMT,FV) = PV(12%/2,40,50,1000) = 849.54

Part B = 94*849.54 = 79856.76

Thanks.

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