Show all work. Use an excel spreadsheet to prepare this assignment. Show what excel equations you used.

Problem 2

A bond has a 10% coupon rate a $1,000 face value. Interest is paid semiannually, and the bond has 20 years to maturity.

(1) If investors require a 12% yield, what is the bonds value at issue?

(2) Will this issue be considered at a discount or at a premium or at par?

Note: The semiannual nature of the interest payment impacts the choice of factor when computing NPV.