The Nickelodeon Manufacturing Co. has a series of $1000 par value bonds outstanding. Each bond pays...

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Finance

The Nickelodeon Manufacturing Co. has a series of $1000 parvalue bonds outstanding. Each bond pays interest semi-annually andcarries an annual coupon rate of 7%. Some bonds are due in 3 yearswhile others are due in 10 years. If the required rate of return onbonds is 10%, what is the current price of
a. The bonds with 3 years to maturity
b. The bonds with 10 years to maturity?
Please show all work and formulas without use of financialcalculator

Answer & Explanation Solved by verified expert

4.2 Ratings (707 Votes)

aPrice of the Bond with 3 Years to maturity The Price of the Bond is the Present Value of the Coupon Payments plus the Present Value of the face Value Face Value of the bond 1000 Semiannual Coupon Amount 35 1000 x 7 x Semiannual Yield to Maturity 500 1000 x See Answer

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The Nickelodeon Manufacturing Co. has a series of $1000 parvalue bonds outstanding. Each bond pays interest semi-annually andcarries an annual coupon rate of 7%. Some bonds are due in 3 yearswhile others are due in 10 years. If the required rate of return onbonds is 10%, what is the current price ofa. The bonds with 3 years to maturityb. The bonds with 10 years to maturity?Please show all work and formulas without use of financialcalculator