Dr. Phillips is considering a bond investment in SuperFast Airlines. The $1,000

Question

Dr. Phillips is considering a bond investment in SuperFast Airlines. The $1,000 par value bonds have a quoted annual interest rate of 11 percent and the interest is paid semiannually. The yield to maturity on the bonds is 14 percent annual interest. There are 9 years to maturity. Compute the price of the bonds based on semiannual analysis. Calculate your final answer using the formula and financial calculator methods. Use Excel Spreadsheets to calculate your answer. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Explanation / Answer

PMT = 55

FV = 1000

rate = 7%

N = 18

use PV function in Excel

price of the bond = 849.11

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