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    Present Value/ Value calculation for Allied Signal Corp.

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    Consider Allied Signal Corporation's 9 7/8 percent bonds that mature on June 1, 2010. Assume that the interest on these bonds is paid and compounded annually. Determine the value of a $1,000 denomination Allied Signal Corporation bond as of June 1, 2004, to an investor who holds the bond until maturity and whose required rate of return is:

    A. 7 percent

    B. 9 percent

    C. 11 percent

    D. What would be the value of the Allied Signal Corporation bonds at an 8 percent required rate of return if the interest rate were paid and compounded semianually?

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    Solution Preview

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    First, Set up known facts:
    - Future Value = ...

    Solution Summary

    The solution solves and finds the present value of Allied Signal bonds at differing rates of return.