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    Estimating market value of a coupon paying bond

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    On March 1, 2005, Matt purchased $63,000 of Lawson Co.'s 8%, 20-year bonds at face value. Lawson Co. has paid the annual interest due on the bonds regularly. On March 1, 2010, market interest rates had risen to 12%, and Matt is considering selling the bonds.


    Using the present value table in in the attachments below, calculate the market value of Matt's bonds on March 1, 2010

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    Solution Preview

    Number of coupon payments made=5
    Number of coupon payments left=20-5=15

    Coupon amount=8% of face value=63000*8%=$5040

    Discount rate=12%

    Refer to table 6.5 attached in the question, PV for an annuity of 1 dollar when number of periods is ...

    Solution Summary

    Solution depicts the steps to estimate market value of a coupon paying bond with the help of attached Present Value tables.