How much would these bonds sell for today?

Question

Assume that company X has an issue of 15-year $1,000 par valu bonds that pay 6% interest, semiannually. Further assume that today's required rate of return on these bonds is 9%. How much would these bonds sell for today? Round off to the nearest $1.

a) $1,066

b) $756

c) $1,321

d) $861

Answer 1

It's a 'Net Present Value' question .. you need to find NPV of $1000 in 15 years discounted at 3% semi-annulally

(Excel has an NPV function you can use)

NB> I note you have posted a lot of questions of this type = I guess they are all part of your homework assignment ?

If you are having problems with understanding the material,  you should talk to the course Tutor .. they can recommend remedial maths classes for you, or did you simply fail to attend class ? or just can't be bothered to work it out yourself ? ...  in which case, perhaps a transfer to something more suited - for example Media Studies - would be a good idea :-)