Determine (to the nearest dollar) the amount you would be willing to pay for a $1,000 par value bond paying $80 interest each year and maturing in 12 years, assuming you wanted to earn a 9 percent rate of return.
A) $929
B) $573
C) $1,316
D) $1,960

Question

Quizplus · Accepted Answer

Solution: PV₀ = $80(PVIFA_0.09,12) + $1000(PVIF_0.09,12) = $80(7.161) + $1000(.356) = $928.88

Determine (To the Nearest Dollar) the Amount You Would Be