If the discount rate on the bond is 8%, the expected payment in year-1 is $952.50; calculate the price of the bond:

Name: If the discount rate on the bond is 8%, the expected payment in year-1 is $952.50; calculate the price of the bond:
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Question

Quizplus · Accepted Answer

Using the formula for present value of bond: 
Price = Payment/(1+discount rate)^n 
Where n is the number of years until payment is received. 
Price = 952.5/(1+0.08)^1 = $907.14 (rounded to the nearest cent)

If the Discount Rate on the Bond Is 8%, the Expected