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A 25-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $825. If the yield to maturity remains at its current rate, what will the price be 5 years from now?

Respuesta :

abiolataiwo2015

Answer:

835.17

Explanation:

Computation of what will be the price 5 years from now

First step is to calculate or find YTM :

=RATE(25,8.5%*1000,-825,1000)

=10.50%

The price of the bond will be calculated by using PV function

=PV(F12,20,8.5%*1000,1000)

=835.17

Therefore If the yield to maturity remains at its current rate, what the price will be 5 years from now is 835.17