Exodus Limousine Company has $1,000 par value bonds outstanding at 10 percent interest. The bonds will mature in 50 years. Compute the current price of the bonds if the percent yield to maturity is a...

Exodus Limousine Company has $1,000 par value bonds outstanding at 10 percent interest. The bonds will mature in 50 years. Compute the current price of the bonds if the percent yield to maturity is

1. 
   a. 5 percent.


2. 
   b. 15 percent.

Solution:

Present Value of Interest Payments

                  PV_A = A × PV_IFA (n = 50,i = 5%)

Present Value of Interest Payments

PV_A = A × PV_IFA (n = 50,i = 15%)