SOLUTION: On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.925%. The purchase price was 87.875, and the commission was $8 per bond. Bonds from thi

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Question 1173389: On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.925%. The purchase price was 87.875, and the commission was $8 per bond. Bonds from this particular company pay interest on February 1 and August 1.
What is the total purchase price (in $) of the bonds? (Round your answer to the nearest cent.)
I was able to get the current yield % of 11.3%
I'm having trouble finding the total purchase price.
Answer by CPhill(1959) About Me  (Show Source):
You can put this solution on YOUR website!
You're on the right track! The total purchase price is calculated by considering both the price of the bonds and the commission. Here's how to break it down:
1. Calculate the cost of the bonds:
Since the purchase price is quoted as 87.875, this means 87.875% of the face value of the bond. Assuming a standard face value of $1000 per bond:
Price per bond: 87.875% of $1000 = $878.75
Total cost of bonds: $878.75 * 10 bonds = $8787.50
2. Calculate the total commission:
Commission per bond: $8
Total commission: $8 * 10 bonds = $80
3. Calculate the total purchase price:
Total purchase price = Total cost of bonds + Total commission
Total purchase price = $8787.50 + $80 = $8867.50
Therefore, the total purchase price of the bonds is $8867.50.