ABC Health Med. has a $1,000 par value bond with an 8 percent rate outstanding. The bond has 12 years remaining to it maturity date. If interest is paid semiannual interest, what is the value of the bond when the required return is 12 percent. Show all work.© BrainMass Inc. brainmass.com June 3, 2020, 11:40 pm ad1c9bdddf
The value of the bond is the present value of interest and principal discounted at the required return. The semi annual interest is 1,000 X 8%/2 = $40, semi annual periods to maturity are 12X2=24, par value is $1,000 ...
The solution explains how to determine the current value of a bond.