General Electric issued 1000 debenture bonds 3 years ago with a face value of $5000 each and a bond interest rate of 8% per year payable semiannually. The bonds have a maturity date of 20 years from the date they were issued. If the interest rate in the market place is 10% per year, compounded semiannually, what is the present worth of one bond to an investor who wishes to purchase it today?

Question

General Electric issued 1000 debenture bonds 3 years ago with a face value of $5000 each and a bond interest rate of 8% per year payable semiannually.  The bonds have a maturity date of 20 years from the date they were issued.  If the interest rate in the market place is 10% per year, compounded semiannually, what is the present worth of one bond to an investor who wishes to purchase it today?

bobpursley · Answer

We will be happy to critique your thinking.

mr. cool · Answer

4190.35