Giant Electronics is issuing 20-year bonds that will pay coupons semiannually. The coupon rate on this bond is 7.8 percent. If the market rate for such bonds is 7 percent, what will the bonds sell for today

Explanation:

Assuming the face value is $1,000

Coupon payment = 1000 x 7.8% = $78 annually = $39 semiannually

Number of periods = n = 20 years x 2 = 40 periods

Yield to maturity = 7% annually = 3.5% semiannually

Price of bond is the present value of future cash flows, to calculate Price of the bond use following formula

Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

Price of the Bond =$39 x [ ( 1 - ( 1 + 3.5% )^-40 ) / 3.5% ] + [ $1,000 / ( 1 + 3.5% )^40 ]

Price of the Bond = $39 x [ ( 1 - ( 1.035 )^-40 ) / 0.035 ] + [ $1,000 / ( 1.035 )^40 ]

Price of the Bond = $832.85 + $252.57

Price of the Bond = $1,085.42

answer; communities of interest; i believe this is correct, plz check first good luck;

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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