What is the present value of the principal? - ProProfs Discuss
Advertisement

What is the present value of the principal?

Now consider a bond with five years to maturity, a face value of \$1,000, and a coupon rate of 6% paid semi-annually and the discount rate is 5%.

Asked by Leo, Last updated: Feb 01, 2023

Request 0Follow Share Answer AnonymouslyAnswer Later Copy Link

1 Answer

John Smith

John Smith

Answered Sep 08, 2016

The present value of the principal is \$781.19, which represents the value today of the \$1,000 principal value of the bond to be received in five years time.note: this method is also used to calculate the present value of strip bonds, which pay their face value at maturity and do not pay a regular income stream.the question is only asking you for the present value of the principal. to solve this question, your pmt entry should be \$0 (you dont want to include the present value of the income stream in your calculation, so you set your pmt to \$0).try the following:10 n2.5 i1,000 fv0 pmtcomp pv

Advertisement
Advertisement
Search for Google images
Select a recommended image
Upload from your computer
Search for Google images
Select a recommended image
Upload from your computer
Search for Google images
Select a recommended image
Upload from your computer