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10pointseBookPrintReferences Check my work Check My Work button is now enabledItem 4Item 4 10 pointsDufner Co. issued 15-year bonds one year ago at a coupon rate of 7.6 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.3 percent, what is the current dollar price assuming a par value of $1,000?

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Answer:

The answer is $1,225.32

Explanation:

N(Number of years)= 28years (14x 2). Because was issued a year ago. The one year will be subtracted from the initial 15years.

I/Y(Yield to Maturity) =2.65% (5.3% ÷ 2)

PV(Present Value) = ?

PMT(Payment) = $38 [(7.6% x $1,000) ÷ 2]

FV(Future value) = $1,000

Using Financial calculator:

The present value of the current price of the bond is $1,225.32

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