Loki Inc. bonds have a $1,000 face value. The promised annual coupon is $71. The bonds mature in 10 years. There are 10 coupon payments of $71 each starting a year from now, and the last payment 10 years from now is coupon plus face.
The market’s required return for these bonds is 8%. What is the price of these bonds?
This question will require you to use Excel’s PV function (to find the present value of an annuity). You can use the PV formula to find the discounted value of coupons. For the discounted value of a Face Value payment, you have to use /(1+r)^N.
