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Value of bond

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The ABC Computer Company has an outstanding issue of bond with a par value of $1000, paying 12% coupon rate semi-annually. The bond was issued 25 years ago and has 5 years to maturity. What is the value of the bond assuming 14% rate of interest if you plan on purchasing the bond today?

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Solution Summary

The solution explains how to determine the value of a bond for ABC computer

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The value of the bond is the present value of interest and principal discounted at the required return. The bonds pay semi annual interest and so ...

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