A $1,000 bond matures in 15 years and carries a 5 percent coupon. The bond is callable in 5 years at a premium equal to one year's interest payments. What is the correct formula for computing the current price given a market rate of 4.7 percent

The formula is

Price of the bond = [ $25 x ( 1 - ( 1 + 2.35% )^-30 )/ 2.35% ] + [ $1,000 / ( 1 + 2.35% )^30 ]

Explanation:

To calculate the price of the bond, use the following formula

Price of the bond = [ Coupon payment x ( 1 - ( 1 + Semiannual market rate )^-numbers od periods )/ Semiannual market rate ] + [ Face value / ( 1 + Semiannual market rate )^numbers of periods ]

Where

Coupon payment = $1,000 x 5% x 6/12 = $25

Semiannual market rate = 4.7% x 6/12 = 2.35%

Numbers of periods = 15 years x 12/6 = 30

Face value = $1,000

Placing values in the formula

Price of the bond = [ $25 x ( 1 - ( 1 + 2.35% )^-30 )/ 2.35% ] + [ $1,000 / ( 1 + 2.35% )^30 ]

hi : ) i found this so i hope this !

"we first find value of tax in dollars.

the difference between the two prices   is: 23. 54 - 22 = 1.54

therefore the sales tax in dollars is 1.54

the tax % will be   (amount of tax / original cost price ) × 100

(1.54 / 22) × 100  → (0.07) × 100 =   7

so the tax rate is 7%

we can double check the answer.

7 % of 22   → (7/100) × 22 → 0.07 × 22 = 1.54

22 + 1.54 = 23.54"