Union Local Scholl District has bonds outstanding with a coupon rate of 4.6% pai

Question

Union Local Scholl District has bonds outstanding with a coupon rate of 4.6% paid semiannually and 21 years to maturity. The yield to maturity on these bonds is 3.9% and the bonds have a par value of $5,000.

A) What is the dollar price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places)

1) Bond price $_____________ (The answer is not 5,515.84)

*****Please have someone who can calculate this problem correctly complete it because the last time it was wrong********

Explanation / Answer

Bond price = Present value (PV) of coupon payments + PV of redemption value (par value)

Semi-annual coupon payment = $5,000 x 4.6% x (6/12) = $115

Number of coupon payments = 21 x 2 = 42

Semi-annual YTM = 3.9% / 2 = 1.95%

Bond price ($) = 115 x PVIFA(1.95%, 42) + 5,000 x PVIF(3.9%, 42)

= 115 x 28.4943 + 5,000 x 0.4444

= 3,276.84 + 2,222

= 5,498.84

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