Answer:
The answer is: $655.20 (rounded to 2 decimal places)
Explanation:
A bond is a contractual agreement between the issuer and the holder which specifies the face value of the bond upon issuance as well as the interest (coupon) which the issuer must pay the holder in fixed instalments within a specified period. A bond's valuation is the determination of a fair market value for a bond given the required rate of return and period of repayment. The computation of such valuation is done by discounting future cash flows at the required rate of return. Given:
The coupon payments (C): $20
The required return (r): 8%
Face Value: $1, 000
The present values associated with the cash flows from each year are calculated as follows: C/(1 + r)^t where t is time period
Year 1: $20/(1+ 0.08)^1 = 18.51851852
Year 2: $20/(1+ 0.08)^2 = 17.14677641
Year 3: $20/(1+ 0.08)^3 = 15.87664482
Year 4: $20/(1+ 0.08)^4 = 14.70059706
Year 5: $20/(1+ 0.08)^5 = 13.61166394
Year 6: $20/(1+ 0.08)^6 = 12.60339254
Year 7: $20/(1+ 0.08)^7 = 11.66980791
Year 8: $(1000+20)/(1+ 0.08)^8 = 551.0742622
Present value of the bond is the sum of all the present values calculated above:$655.2016634 . This is the maximum amount the holder must be willing to pay. Note: at year 8, the issuer must repay the face value plus coupon.
Regardless of whether there is a idea that the perusers and the writer would be comfortable with the material.it implies the thought is well known enough to be comprehended by the peruser. The idea is simple enough to be gotten a handle on by any individual who might run over the content. It is typically utilized by creators to pick up fame.
Further Explanation:
Common knowledge:
Common knowledge is learning that is known by everybody or about everybody, more often than not with reference to the network in which the term is utilized. Regular information need not concern one explicit subject, for example science or history.
Common knowledge impact:
The common knowledge impact exhibits that a superfluous factor—the quantity of individuals who know a specific snippet of data—can influence cooperative choices. In the event that a bit of unshared data is critical to settling on a right choice, the outcome might be a mistaken choice.
Which thought about common knowledge:
In contrast to citations or summarized thoughts, data that is considered "regular information" shouldn't be refered to. "Basic learning" is data that is considered generally known or effectively checked.
Subject: business
Level: High School
Keywords: Common knowledge, Common knowledge impact, Which thought about common knowledge.
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Answer:
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