document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=666388>Question 666388</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Callaghan Motors bonds have 10 years remaining to maturity.Interest is paid annually, they have a 1000 par value, the coupon interest rate is 8%, and the yeild to maturity is 9%. What is the bond's current market price? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #414426 by </B><A HREF=/tutors/aboutme.mpl?userid=swincher4391><B>swincher4391(1107)</B></A><img src=\"/images/stars/stars-12.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=swincher4391><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=swincher4391><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=414426\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> PV factor of sum = (1+i)^-n<BR>\n" );
document.write( "= (1+9%)^-10<BR>\n" );
document.write( "=1.09^-10<BR>\n" );
document.write( "= 0.4224\r<BR>\n" );
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document.write( "PV factor of annuity = 1 - (1+i)^-n / i<BR>\n" );
document.write( "= 1 - (1+9%)^-10 / 9%<BR>\n" );
document.write( "= 1 - 0.4224 / 9%<BR>\n" );
document.write( "= 0.5775 / 9%<BR>\n" );
document.write( "= 6.417\r<BR>\n" );
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document.write( "= PV factor of Sum * Par Value + PV factor of annuity * coupon payment<BR>\n" );
document.write( " <BR>\n" );
document.write( "= 0.4224 * 1,000 + 6.417 * 80<BR>\n" );
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document.write( "= 422.4 + 513.3<BR>\n" );
document.write( " <BR>\n" );
document.write( "= 935.76 </SPAN>\n" );
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