9-77 What is the price of the bond if market interest rates are 5 percent?

Name: 9-77 What is the price of the bond if market interest rates are 5 percent?
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Question

Quizplus · Accepted Answer

Using the formula for the present value of a bond, we get:
PV = ($60/1.05) + ($60/1.05^2) + ($60/1.05^3) + ($1,060/1.05^3)
PV = $1664.94
Therefore, the price of the bond if market interest rates are 5 percent is $100,952.38, which is closest to option A.

9-77 What Is the Price of the Bond If Market