Harpeth Valley Water District has a bond outstanding with a coupon rate of 3.55 percent and semiannual payments. The bond mature
s in 22 years, with a yield to maturity of 4.11 percent, and a par value of $5,000. What is the market price of the bond
1 answer:
Answer:
$4,597.10
Explanation:
In this question we use the Present value formula that is shown on the attachment below:
Given that,
Future value = $5,000
Rate of interest = 4.11%
÷ 2 = 2.055%
NPER = 22 years × 2 = 44 years
PMT = $5,000 × 3.55% ÷ 2 = $88.75
The formula is shown below:
= PV(Rate;NPER;PMT;FV;type)
So, after solving this, the market price of the bond is $4,597.10
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