Morin Company's bonds mature in 8 years,have a par value of $1,000,and make an annual coupon interest payment of $65.The market requires an interest rate of 6.7% on these bonds.What is the bond's price?

Question

Quizplus · Accepted Answer

Using the bond pricing formula, we can calculate the price of the bond as follows: 
Price = ($65 / 0.067) x [1 - 1 / (1 + 0.067)^8] + $1,000 / (1 + 0.067)^8 = $987.92

Morin Company's Bonds Mature in 8 Years,have a Par Value