A 12% coupon rate bond makes semiannual interest rate payments.  Par
value is $1000.  The bond matures in 10 years.  The required rate of
return is 10%.  Use any of the following information to find the
current price.

PVIFA = 12%, n = 10 = 5.6502;  PVIF = 12%, n = 10 = .3220
PVIFA = 10%, n = 20 = 8.5136;  PVIF = 10%, n=20 = .1486
PVIFA = 5%,  n = 20 = 12.4622; PVIF = 5%, n = 20 .3769 

A) $942
B) $1,000
C) $1,063
D) $1,125
E) None of the above

Hi chooseme,

The current value ("price") for a bond can be calculated such that the
original price ("par value") and actual interest earned ("coupon
rate") are equally beneficial as the current value and the required
rate of return.

I used the Pamela Peterson's Bond Calculator:
http://garnet.acns.fsu.edu/~ppeters/webwork/java/bondcal.htm

I entered the following values into the online calculator at the top
of that page:

   Number of years to maturity: 10
   Coupon rate: 12
   Face value: 1000
   Yield to maturity: 10

When I clicked "Compute", the bond value was shown as $1124.62. To the
nearest dollar this is $1125, which corresponds to your answer "D".

Pamela Peterson's Bond Calculator is specifically set up for
semiannual interest payments, so I did not need to make any special
provision for that.

The underlying formula is shown and explained at the moneychimp site:

Bond Yield to Maturity (YTM) Formula
http://www.moneychimp.com/articles/finworks/fmbondytm.htm


Google search strategy:

"bond value" calculator
://www.google.com/search?q=%22bond%20value%22%20calculator


Regards,
eiffel-ga