Jackson Corporation’s bonds have 12 years remaining to maturity.

Interest is paid annually, the

bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to
maturity of 9%. What is the current market price of these bonds?
Data
N 12 years
Par Value Maturity value/Face Value 1000
CR 0.08
YTM/Required rate of return/Kd 0.09
Current Market Price/V ={I*[((1-(1/(1+Kd)^N))/Kd]}+MV/(1+Kd)^N
Required
Coupon Payment or I =Coupon rate*MV =0.08*1000 80
kd=investor's required rate of return or YTM 0.09
V =[80*((1-1/1.09^12)/0.09)]+[1000/1.09^12]
V 928.393
{I*[((1-(1/(1+Kd)^N))/Kd]}
1/1.09^12 0.355535
1-1/1.09^12 0.645
(1-1/1.09^12)/0.09 7.167
573.3333
[1000/1.09^12] 355.5347
V 928.8681
V 950
Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature in 8 years, have a
face value of $1,000, and a yield to maturity of 8.5%. What is the price of the bonds?
Data
CR 0.1 0.1/2
N 8 YEARS =8*2 16
Face Value/Maturity Value/Par Value 1000
YTM/Kd 0.085 0.085/2
Current Market Price/V ={I*[((1-(1/(1+Kd)^N))/Kd]}+MV/(1+Kd)^N
Coupon Payment or I =Coupon rate*MV =0.1/2*1000 50
kd=investor's required rate of return or YTM =0.085/2 0.0425
V =(50*(1-1/1.0425^16)/0.0425)+(1000/1.0425^16)
1085.802
(50*(1-1/1.0425^16)/0.0425) 572.015
(1000/1.0425^16) 513.787
V 1085.802
ture in 8 years, have a