Calculating bonds?

CR, Inc. has 7% coupon bonds with 10 yrs. to maturity. The bond requires annual coupon payments. The face value is $1,000. Calculate the current price of the bond if the yield to maturity is 9%

I hope you have a financial calculator. The thing is this. If the market rate, is higher than the coupon rate, this means that the coupon is selling at a discount. So, by this information, you know that the current price of the bond is going to be lower because the interest is going to get you up to 1000. If it was the other way around, you would be getting down to 1000. So, with this being said. The first thing you have to do is find the payment. You do this by, entering into your financial calculator.

FV-1000
%i-7%
time-10
You’re computing the PMT-
You should’ve gotten 72.37

Now you need this number to calculate the current price of the bond, your original question.

FV-1000
%i-9%
PMT-(the number you just calculated)-72.37, depending on your calculator, you might have to put this in as a negative number.
Time-10
You are computing the PV-

Your answer should be
$886.85.

Non-material change is irrelevant. If you are off cents or even 1 or 2 dollars.

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