Ten years ago Bacon Signs Inc. issued twenty-five-year 8% annual coupon bonds with a $1,000 face value each. Since then, interest rates in general have risen and the yield to maturity on the Bacon bonds is now 9%
Given this information, what is the price today for a Bacon Signs bond?
A) $1,000
B) $919.39
C) $901.77
D) $1.085.59
Answer: B
Explanation: B)
Bond Price = PMT × +
= $80 × + = $919.39.
MODE = END
INPUT 15 12 0 -80 -1,000,000
KEY N I/Y PV PMT FV
CPT 919.39
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