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Booker Petroleum Refiners (BPR) has an issue of 5-year, 9% annual coupon bonds outstanding. The bonds, which were originally issued 15 years ago, have a face value (FV) of $1,000, a yield-to-maturity (YTM) of 12%, and are noncallable. What is the current market price of BPRs bonds?

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Answer:

$891.86

Explanation:

For this question, we use the Present value formula that is to be shown on the attachment. Kindly find it below:

Given that,  

Future value = $1,000

Rate of interest = 12%

NPER = 5 years

PMT = $1,000 × 9% = $90

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the present value is $891.86

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