Answer:
Bond Price= $1,193.9
Explanation:
Giving the following information:
Face value= $1,000
Coupon= 0.08*1,000= $80
Discount rate= 0.05
Years to maturity= 8 years
To calculate the price of the bond, we need to use the following formula:
Bond Price= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]
Bond Price= 80*{[1 - (1.05^-8)] / 0.05} + [1,000/(1.05^8)]
Bond Price= 517.06 + 676.84
Bond Price= $1,193.9
