Question

ABC company issues a 10-year $1000 bond with coupon rate of 10% and interest is paid annually. If ABC wants to revise its payment term, that is, no interest payment is made until the end of year 6, and interests in arrear and principal are paid in the year 10. The yield to maturity of bond with comparable risk is 15%, the bond price ought to be
(P/F,15%,5)=0.497 (P/F.159,10)=0.2472 (P/A,15%,5)=3.352

A $1500
B $698
C $371
D. $538​


which one is correct??

very very urgent. help me.​

Answer 1

Answer:

If ABC wants to revise its payment term, that is, no interest payment is made until the end of year 6, and interests in arrear and principal are paid in the year 10. The yield to maturity of bond with comparable risk is 15%, the bond price ought to be (P/F,15%,5)=0.497 (P/F.