H A B C D E F G 1 Homework 6 - Bond Valuation 2 (1) 3 Suppose Hyatt issues a bond with a par value of $1,000, 25 years to maturity, 4 and a coupon rate of 8% paid annually. If YTM is 6.4%, what is the current price of the bond? 5 6 Bond Price = PV(coupon) + PV(face value) 7 = coupon * PVAIF + $1,000 * PVIF 8 PVAIF (6.4%, 25, -1) = 12.3116 9 PVIF (6.4%, 25, 0, -1) = 0.2121 10 Each coupon = $1,000 * 8% = $80 11 12 Bond Price = coupon * PVAIF + $1,000 * PVIF =80*C8+1000*C9 13 = =80*C8+1000*C9 at premium 14 15 16 17 18 19 20 21 22 23 ggggg Sheet1 Sheet2 Sheet3 + Ready