What will the bond price be 5 years from now? and Bond Girl - Ruger and Glock

What will the bond price be 5 years from now?

A 25-year, $ 1000 par value bond has an 8.5% annual coupon. The bond currently sells for $ 875. If the yeild to maturity remains at its current rate, what will the price be five years from now?


Bond best answer:

Answer by Marc
First you have to calculate the current yield to maturity. You do this by solving for the RATE function using the following criteria:

Number of Periods = 25
Annual Payment = $ 85 ($ 1,000 X 8.5%)
Future Value $ 1,000
Present Value -$ 875

The RATE calculates to 9.863%

Now calculate the Present Value using this criteria

Future Value $ 1,000
Number of Periods = 20 (25 - 5)
Annual Payment = $ 85 ($ 1,000 X 8.5%)
RATE = 9.863%

The Present Value calculates to -$ 882.90

So in five years, the bond will sell for $ 882.90

Bond

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Half naked girls, classy outifts, and nice weaponry. Yeah, Bond inspired.

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