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Fantastic Floors Inc. just issued zero-coupon bonds with a par value of $1,000. The bond has a maturity of 19 years and a yield to

Fantastic Floors Inc. just issued zero-coupon bonds with a par value of $1,000. The bond has a maturity of 19 years and a yield to maturity of 10.49%, compounded semi-annually.

Round the answer to two decimal places in percentage form

PLEASE ANSWER USING THE FOLLOWING EXAMPLE

Marco Chip, Inc. just issued zero-coupon bonds with a par value of $1,000. The bond has a maturity of 19 years and a yield to maturity of 11.63 percent, compounded semi-annually. What is the current price of the bond?

Round the answer to two decimal places.

Your Answer:

Step 1: Think in terms of periods instead of years

19 years means 19*2 = 38 semi-annual periods

Annual interest rate 11.63%, compounded semi-annually, means 11.63%/2 = 5.815% per each half-of-a year

Step 2: Open Excel. Click Formulas Financial find function PV

Enter: Rate 11.63%/2

Nper 19*2

Pmt 0 (since it is a zero-coupon bond)

FV 1000

Type 0

Get the answer 116.74

=PV(11.63%/2,19*2,0,1000,0) = 116.74 (The answer appears in Excel as a negative number)

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