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Madsen Motors's bonds have 13 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 11%; and the yield to maturity is 9%. What is the bond's current market price? Round your answer to the nearest cent. $

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Answer:

$1,149.74

Explanation:

In this question we use the Present value formula that is shown on the attachment below:

Data provided in the question

Future value = $1,000

Rate of interest = 9%

NPER = 13 years

PMT = $1,000 × 11% = $110

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the current market price of the bond is $1,149.74

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