(Answered) What was the price of the bonds on Jan

Management Studies

Problem: The Pen Corporation issued a new series of bonds on Jan. 1 1990. The bonds were sold at par (1000), had a 12% coupon and matured in 30 years on December 31, 2019. Coupon payments are made semi-annual (on June 30 and December 30). Please show steps how you get an answer and please be clear in your explanation.

Required:

Question 1: What was the price of the bonds on Jan 1995 (5 years later) assuming that interest rates had fallen to 10%?

Question 2: Why does n=50?

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