Bond price calculation: coupon rate 10%, face value HK$20,000, div's paid annually

super-coca-cola

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Jun 10, 2018
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Hi guys I have the following problem to solve! This question comes from a study guide and I'm trying to use a financial calculator to do but can't seem to get it right! Hope you can help me , here's question:

Company A issues a three-year bonds with a coupon rate of 10%, a face value of HK$20,000 and dividends paid once a year. At the time of issue, market investors required a return of 8%. According to the above terms, what is the market price of the bond?

Accord to the study guide the answer is : 21,030.83

but I don't know how to get to this answer!

My assumption is:
N: 3
I/Y : So far I've tried 10% , 8%, 18% and 108% (and it all came out wrong)
PMT: 2000
FV: 20000

I'm sure my assumption is wrong! Please help??

Thank you!!!
 
Hi guys I have the following problem to solve! This question comes from a study guide and I'm trying to use a financial calculator to do but can't seem to get it right! Hope you can help me , here's question:

Company A issues a three-year bonds with a coupon rate of 10%, a face value of HK$20,000 and dividends paid once a year. At the time of issue, market investors required a return of 8%. According to the above terms, what is the market price of the bond?

Accord to the study guide the answer is : 21,030.83

but I don't know how to get to this answer!

My assumption is:
N: 3
I/Y : So far I've tried 10% , 8%, 18% and 108% (and it all came out wrong)
PMT: 2000
FV: 20000

I'm sure my assumption is wrong! Please help??

Thank you!!!

I can't help you with the calculator. Never used one for this sort of thing.

Cash Flow at time 1: 2000 -- You got that.
Cash Flow at time 2: 2000 -- You got that.
Cash Flow at time 3: 2000 + 20000 -- Did you get that? It's not a simple annuity. You need an NPV Calculation that takes irregular payments.

Give it another go.
 
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