Posted by pookie on .
a 10 year bond pays 8% on a face value of $1000. If similar bonds are yeilding 10%, what is the market value of the bond. use annual analysis
The formula is:
PV of the principle, $1,000
Plus the PV of the interest
Are you using Present Value Tables?
PV of the principle comes from the PV of $1.
PV of the interest is one years' interest and the factor from he PV of annuity table.
Use the 10% column from the table for 10 periods.