Answer:
Price of the Bond is $1,120.85
Explanation:
Coupon payment = 1000 x 8.1% = $81
Number of years = n = 9 years
Yield to maturity = 6.3%
Price of bond is the present value of future cash flows, to calculate Price of the bond use following formula:
Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]
Price of the Bond =$81 x [ ( 1 - ( 1 + 6.3% )^-9 ) / 6.3% ] + [ $1,000 / ( 1 + 6.3% )^9 ]
Price of the Bond = $81 x [ ( 1 - ( 1.063 )^-9 ) / 0.063 ] + [ $1,000 / ( 1.063 )^9 ]
Price of the Bond = $543.82 + $577.03
Price of the Bond = $1,120.85
