You have the opportunity to purchase a $1,000 par value bond paying a coupon rate of 5%. Coupons are paid annually and the bond has 16 years until it matures. Similar bonds in the market have a yield-to-maturity of 4.85%. What is the value of this bond?

Remember, a bond is like a loan: you will get the par value back when the bond matures, so your FV is $1,000

You have the opportunity to purchase a $1,000 par value bond paying a coupon rate of 5%. Coupons are paid annually and the bond has 16 years until it matures. Similar bonds in the market have a yield-to-maturity of 4.85%. What is the value of this bond? Remember, a bond is like a loan: you will get the par value back when the bond matures, so your FV is $1,000