Motto: I am proud to be a Cloverdale Cowboy, and the future of America. I have respect for myself, others, and property. There is no limit to what I can achieve. I promise to accept the challenges that will make me a leader of tomorrow. Welcome to Cloverdale Elementary School.
The present value of the face value (i.e. the maturity value) is calculated as follows: Therefore, the price of a bond is given by the following formula: Example 1: Bond with annual coupon payments. Company A has issued a bond having face value of $100,000 carrying annual coupon rate of 8% and maturing in 10 years. The market interest rate is 10%. The price of the bond is calculated as the present value of all future cash flows: Example 2: Bond with semiannual coupon payments. Company S has issued a bond having face value of $100,000 carrying coupon rate of 9% to be paid semiannually and maturing in 10 years.
Bond Premiums and Discounts. â¢ Coupon Rate. â¢ Determines the amount of the interest payment. â¢ Example: if a $1,000,000 face value bond has an. annual coupon rate of 6%, the annual interest payment. is $60,000. â¢ Historical Effective Interest Rate. â¢ Determines the amount of the interest expense . â¢ Example: if a bond has a book (carrying) value of. $950,000 and an annual historical effective rate of 7%, the annual interest expense is $66,500. â¢ Current Market Yield. â¢ Determines the current market (fair) value of the bond. â¢ Example: A bond has a face value of $1,000,000 and. an annual coupon rate of 6% and a 5-year maturity. If. the current market yield of the bond is 7%, the value. of the bond will be $958,998 (present value of all. future payments discounted at 7%).