Financial Management: P16-5 The Southeast Investment Fund buys 70 bonds of the Hillary Bakery

Financial Management

Problem 16-5 Bond value
The Southeast Investment Fund buys 70 bonds of the Hillary Bakery Corporation through its broker. The bonds pay 9 percent annual interest. The yield to maturity (market rate of interest) is 12 percent. The bonds have a 25-year maturity. Assume the par value of the bond is $1,000. Using an assumption of semiannual interest payments:

1. Compute the price of a bond. (Round "PV Factor" to 3 decimal places. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
2. Compute the total value of the 70 bonds. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
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