Question
2. You own $30,000 in bonds that pay 4.50% per year, with annual bond payments. The bonds mature 17 years from now, and will have
2. You own $30,000 in bonds that pay 4.50% per year, with annual bond payments. The bonds mature 17 years from now, and will have a redemption value of $30,000. You wish to sell them, and the buyer is willing to accept an annual yield of 3.00%. What price should you sell the bonds for?
3. How much should you pay for a 30 year bond that makes quarterly interest payments, has a face value of $100, and a coupon rate of 3.50% per year? The bond redemption price is $200, and you wish to achieve an annual yield of 9.75%.
The first image is the answer key, and the second is my attempt at solving it, I'm slightly off on both and don't know how.
2) $35,920 3) $45.02 Vn=$30,000(P/F,3%,40)+(5.2%)($30,000)(P/A,3%,40)Vn=30000(0.30656)+(0.052)(30000)(23.11477)Un=$45,307.21Un=$45,0003.Un=$200(P/F,9.76%,120)+(3.5%)($100)(P/A,9.75%,120)Un=200(.000014173)+(.035)(100)(10.2563)Un=$35.89988Un=$36Step by Step Solution
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