Calculating Bond Parameters - Part 1

For a bond with a principal value $P$ , coupon rate $c$ and a time period (\T), and a prevailing interest rate $i$ throughout the time period, the value of the bond is the present value of its cash inflow and it is given by:

$\begin{aligned} PV & = \displaystyle \sum_{n=1}^T {\dfrac{cP}{(1+i)^n}} + \dfrac {P}{(1+i)^T} = \displaystyle \sum_{n=1}^{10} {\dfrac{0.05\times 1000} {(1+0.07)^n}} + \dfrac {1000}{(1+0.07)^{10}} \\ & = \dfrac {50\left(1 - \frac{1}{1.07^{11}} \right)}{1-\frac{1}{1.07}} - 50 + \dfrac{1000}{1.07^{10}} = \boxed{860} \end{aligned}$