Betty bought a 9% four-year bond with a par value of $100. The bond pays the coupon payments semi-annual. The current discount rate is 10%. Please calculate the PV (present value) of the 1st coupon. A) $3.89 B $4.29 C) $4.50 $3.70

Betty bought a 9% four-year bond with a par value of $100. The bond pays the coupon payments semi-annual. The current discount rate is 10%. Please calculate the PV (present value) of the 1st coupon. A) $3.89 B $4.29 C) $4.50 $3.70

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...

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Concept explainers

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.

Question

Betty bought a 9% four-year bond with a par value of $100. The bond pays the coupon payments semi-annual. The current
discount rate is 10%. Please calculate the PV (present value) of the 1st coupon.
A) $3.89
B $4.29
$4.50
D) $3.70

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