Barry’s Steroids Company has $1,000 par value bonds outstanding at 13 percent in

Question

Barry’s Steroids Company has $1,000 par value bonds outstanding at 13 percent interest. The bonds will mature in 30 years.

If the percent yield to maturity is 11 percent, what percent of the total bond value does the repayment of principal represent? Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
  

Principal as a percentage of bond price________%

Explanation / Answer

PVIFA = 8.6938

So, PV of interest payment (Appendix A)

PVA = 130 * 8.6938 = 1130.194

PVIF = 0.0437

So, PV of principal payment (Appendix B)

PV= FV * PVIF = 1000 * 0.0437 = 43.7

Bond price = 1130.194 + 43.7 = 1173.894

Principal as % of price = 43.7/1173.894 = 3.72%

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