Question

Question 1: Peking Duct Tape Company has outstanding a $1,000-face-value bond with a 14 percent
coupon rate and 3 years remaining until final maturity. Interest payments are made semiannually. What
value should you place on this bond if your nominal annual required rate of return is 14 percent?​

Answer 1

Answer:

$999.69 or $1,000

Value should equal $1,000 when the nominal annual required return equals the coupon rate. Our answer differs from $1,000 only beacuse of rounding in the Table values used.