A firm has an issue of $1,000 par value bonds with a 8 percent stated interest rate outstanding. The issue pays interest annuall

Question

3 years ago

12

A firm has an issue of $1,000 par value bonds with a 8 percent stated interest rate outstanding. The issue pays interest annuall

y and has 10 years remaining to its maturity date. If bonds of similar risk are currently earning 8 percent, the firm's bond will sell for __________ today.

Business

1 answer:

dem82 [27] · Answer 1 · 2021-12-28T16:12:37+03:00

dem82 [27]3 years ago

6 0

Answer: $1268.20

Explanation:

value of the bond today = Present value of coupon (interest) payments + present value of principal = 120[PVOAIF8%, 10] + 1000[PVIF8%, 10] =1,268