Union Local School District has bonds outstanding with a coupon rate of 2.9 perc

Question

Union Local School District has bonds outstanding with a coupon rate of 2.9 percent paid semiannually and 24 years to maturity. The yield to maturity on these bonds is 2.5 percent and the bonds have a par value of $10,000.

What is the price of the bonds? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Union Local School District has bonds outstanding with a coupon rate of 2.9 percent paid semiannually and 24 years to maturity. The yield to maturity on these bonds is 2.5 percent and the bonds have a par value of $10,000.

Explanation / Answer

Solution:

Present value of note receivbale = Present value of redeemable value + Present value of coupon payments Redeemable value 10,000 Coupon Payment   - 2.9 % / 2 * 100 145 Periods, 24 * 2 years 48 Present value of redeemable value Redeemable value 10,000 PVIF @ 2.5 % / 2 for 48 periods 0.551 Present value of redeemable value 5,509.00 Present value of coupon payment Coupon Payment   - 2.9 % / 2 * 100 145 PVAF @ 2.5 % / 2 for 48 periods 35.931 Present value of coupon payment 5,210.00 Present value of bond                       10,719.00

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