RBC INC. Issued corporate bonds with a 10% coupon payable semiannually. The bond has a maturity of 8 years, a yield to maturity of 8.5%, and a face value of $1,000. What is the price of the bond

Bond Price​= $1,085.81

Explanation:

Giving the following information:

Coupon= (0.1/2)*1,000=$50

YTM= 0.085/2= 0.0425

Face value= $1,000

Maturity= 8*2= 16 semesters

To calculate the price of the bond, we need to use the following formula:

Bond Price​= cupon*{[1 - (1+i)^-n] / i} + [face value/(1+i)^n]

Bond Price​= 50*{[1 - (1.0425^-16)] / 0.0425} + [1,000 / (1.0425^16)]

Bond Price​= 572.02 + 513.79

Bond Price​= $1,085.81

answer; work samples;

you will have $2593.74 in 10 years if you set aside $1,000 at 10%

you will have $9321.91 in 20 years if you set aside $2000 at 8%

you will have $1469.32 in 5 years if you set aside $1000 at 8%

you will have $1296.87 in 10 years if you set aside $500 at 10%

you will have $239.66 in 15 years if you set aside $100 at 6%

you will have $4660.96 in 20 years if you set aside $1000 at 8%