“Bond Price Calculation – Varying Coupon PMT19. A company just issued a unique, 5-year bond with a face value of $1,000 that pays a coupon of $60 in year 1, $70 in year 2, $80 in year 3, $90 in year 4, $100 in year 5. The company also pays the face value of the bond at the end of year 5. If the yield to maturity is 8%, what is the price of this bond? (Assume coupons are paid annually)”
The Bond Price is the present value of coupons + the present value of the face value or P = 60/(1.08)¹ + 70/(1.08)² + 80/(1.08)³ + 90/(1.08)⁴ + 100/(1.08)⁵ + 1000/(1.08)⁵ = $993.87