Answer :
Calculation of value of bond:
1. Maturity Value
2.6.48574 $1,014.16
3.8.47148 $1,017.86
4.10.51900 $1,021.41 5
5.14.87875 $1,028.12
Below shows the formula used in above calculations:
1. Maturity Value
2. 6.48574 =PV (7.5%/2,6.48574, -1000*8%/2, -1000)
3. 8.47148 =PV (7.5%/2,8.47148, -1000*8%/2, -1000)
4. 10.519 =PV (7.5%/10.519, -1000*8%/2, -1000)
5. 14.87875 =PV (7.5%/14.87875, -1000*8%/2, -1000)
The coupon price is calculated through including up the full quantity of annual bills made through a bond, then dividing that through the face fee (or “par fee”) of the bond.
If an investor purchases a $1,000 ABC Company coupon bond and the coupon price is 5%, the company offers the investor with a 5% hobby each year. This approach the investor gets $50, the face fee of the bond derived from multiplying $1,000 through 0.05, each year.
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