Answer:
Bond price= = $869.84
Explanation:
Given data:
Face value (F)=$1000
Interest rate (i)=10%
Coupon rate (c)= 7% annually
No of year n = 14
we know that bond price is given as
[tex]Bond price= C\times \frac{1-(1+r)^{-n}}{r}+\frac{F}{(1+r)^n}
[/tex]
putting all value to get the desired value
[tex]= 0.07 \frac{1-(1+0.10)^{-14}}{0.10}+\frac{1000}{(1+0.10)^14}[/tex]
= $869.84