Question:
First calculate V- and V+, the bonds value at 7.25% and 8.75% yields to maturity. The bond values are $1,052.70 and $950.69, respectively:
N = 20; I/Y = 7.25 / 2 = 3.625; PMT = 40; FV = 1,000; CPT PV = -1052.70
N = 20; I/Y = 8.75 / 2 = 4.375; PMT = 40; FV = 1,000; CPT PV = -950.69
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