Quantitative Problem: Potter Industries has a bond issue outstanding with an ann

Question

Quantitative Problem: Potter Industries has a bond issue outstanding with an annual coupon of 6% and a 10-year maturity The par value of the bond is $1,000. If the going annual interest rate is 8.2%, what is the value of the bond? Round your answer to the nearest cent. Do not round intermediate calculations. 03 Show All Feedback Quantitative problem: Potter Industries has a bond issue outstanding with a 6% coupon rate with semiannual payments of $30, and a 10-year maturity. The par value of the bond is $1,000. If the going annual interest rate is 8.2%, what is the value of the bond? Round your answer to the nearest cent. Do not round intermediate calculations. Show All Feedback

Explanation / Answer

1)use pv formaule in excel
=pv(rate,nper,pmt,fv,type)
=pv(8.2%,10,(1000*6%),1000,0)
=853.70

2)use pv formaule in excel
=pv(rate,nper,pmt,fv,type)
=pv(8.2%/2,10*2,(1000*6%/2),1000,0)
=851.82

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