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Calculate the value of a $5,000-par-value bond paying quarterly interest at an annual coupon interest rate of 12% and having 9 years until maturity if the required return on similar-risk bonds is currently a 16% annual rate paid quarterly.

What is the present value of the bond? Round to the nearest cent.

Submitted: 1125 days and 6 hours ago.
Category: Tax
Value: $5
Status: CLOSED
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Accepted Answer

The Present Value of a Bond= The Present Value of the Coupon Payments (an annuity)+The Present Value of the Par Value (time value of money)

=$2,836.24+$1,218.34

=$4,054.58

 

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Expert: RD
Pos. Feedback: 99.4 %
Accepts: 
Answered: 10/24/2006

Certified Public Accountant (CPA)

CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..

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