me 000 5 Bond Valuation 6 7 Estimating the present value of a bond. 8 9 Problem 1: We want to estimate the present value of a bond that has a par value of $1,000, and a coupon rate of 10%. The bond pays 10 interest annually and similar bonds are currently priced to yield 10%. It has fifteen years left to maturity. 11 12 13 Given: 14 15 Definition Notation: Inputs: 16 Par Value par 1,000 17 Maturity t IS 18 Coupon Rate CR 10% 19 Required rate of return for the bond. 10% 20 Interest INT ? 21 Present Value of the bond. B, ? 22 23 Par value = Face Value (usually in $1,000 increments) = amount stated on the bond.. 25 Maturity is the number of years until the bond is redeemed. 27 The coupon interest rate the stated annual interest rate on a bond. 28 The coupon payment = the specified number of dollars of interest paid cach period. 29 r