Answer:
The price of the bond today is $784.27
Explanation:
Face value (FV): $1000
Coupon rate: 8% -> counpon received annually (PMT) is $80 (= $1000 * 8%)
Tenor: 15 years
YTM: 11%
Present value = Future Value/ (1+ YTM)^tenor
We can use excel to calculate Present Value of annual payment = PV(Rate,tenor,-PMT) = PV(11%,15,-80) = $575.27
The price of bond today = present value of face value + present value of coupon received annually
= 1000/(1+11%)^15+ 80/(1+11%)^15 + 80/(1+11%)^14+.... +80/(1+11%)^1
= 1000/(1+11%)^15 + $575.27
= $784.27
