Explore BrainMass

Explore BrainMass

    Bond value

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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

    Solution Preview

    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 ...

    Solution Summary

    The solution explains how to determine the current value of a bond.