Question
The Health Corp issued an 12%, 15 yr bond 5 yrs ago. At the time of issue the bond's par value was $1,000. Comparable bonds are yielding 10% today. What must Health Corp's bond sell for in today's market to yield 20% (YTM) to the buyer? Assume bond pays interest quarterly.
Formula: Pb=PMT[PVFAk,n]+FV[PVFk,n]
Pb=$30[PVF 5,40] + $1,000[PVF 5,40]
PMT= $30
k=5%
n=40
I don't know where to go from here... Please help!
Formula: Pb=PMT[PVFAk,n]+FV[PVFk,n]
Pb=$30[PVF 5,40] + $1,000[PVF 5,40]
PMT= $30
k=5%
n=40
I don't know where to go from here... Please help!