Austin Power Company will issue 20-year, semiannual bonds with an 7.0% coupon rate and a $1,000 par value. Bonds of similar risk and maturity are currently selling to yield 8.0% in the market place
What is the market price of one of the firm's new bonds? Use a financial calculator to determine your answer.
A) $1,000.00
B) $953.16
C) $901.04
D) $879.36
Answer: C
Explanation: C)
Mode: PY = 2; C/Y = 2
Input: 40 8 ? -35 -1,000
Key: N I/Y PV PMT FV
CPT: 901.04
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