Nickolas Industries issued bonds with a face value of $12,000,000 and a coupon rate of 5% paid semiannually for 6 years. The market rate of interest is 6%.
How much is the market value of the bond?
A) $12,500,000
B) $11,649,022
C) $11,653,456
D) $11,402,760

Question

Quizplus · Accepted Answer

Interest payment = $12,000,000 × 5% × 6/12 = $300,000
N =12 (6* 2) I/Y = 3.0 (6% /2) PV = ? PMT = 300,000 FV = 12,000,000
PV = $11,402,760

Nickolas Industries Issued Bonds with a Face Value of $12,000,000