Determine the amount you would be willing to pay for a $1,000 par value bond paying $80 interest each year (annual) and maturing in 12 years, assuming you wanted to earn a 9% rate of return.
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a
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Interest per year
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mce_markernbsp; 80.00
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b
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Years to maturity
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12
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c
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Par value
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mce_markernbsp; 1,000.00
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d
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Required rate of return
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9%
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e
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Intrinsic value of bond
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mce_markernbsp; 928.39
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($1000/1.09^12 + $80 x PVIFA(12,9%)
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