Fifteen years ago TravelEasy Inc. issued twenty-five-year 10% annual coupon bonds with a $1,000 face value each. Since then, interest rates in general have fallen and the yield to maturity on the firm's bonds is now 6%
Given this information, what is the price today for a TravelEasy bond?
A) $1,000
B) $1,294.40
C) $1,091.08
D) $914.41
Answer: B
Explanation: B)
Bond Price = PMT × +
MODE = END
INPUT 10 6 0 -100 -1,000
KEY N I/Y PV PMT FV
CPT 1,294.40
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