Question

I am having a hard time figuring out the equation that I should be using to determine the value of a $1000 denomination for a Bond with a 7% coupon rate maturing in 20 years with a required interest rate of 8%. Is there maybe any online calculators that can help?

Answer 1

Here is an equation. There may be a calculator available but I didn't see it.
http://en.wikipedia.org/wiki/Bond_valuation

Answer 2

Here is a calculator. I don't know if this is exactly what you want or not. Let me know. http://www.calcxml.com/do/inv03

Answer 3

You want a yield to maturity of 8%, presumably because that is the current market rate for that type of bond and maturity, so that is what is "required".

Using (Broken Link Removed) and a trial and error method, I compute that a current bond price of $902 will yield 8% to maturity.

Bonds typically pay interest semiannually.

Answer 4

Thank you both very much! This should help me!