Price of the bond
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A firm wants to issue a 5 year bond with a coupon rate of 8% yield to maturity of 6%, and interest payments made semi-annually.
1) At what price will the firm be able to sell the bond?
2) How many bonds must the firm sell to raise $1,000,000 in capital?
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Solution Summary
This provides the steps to calculate the Price of the bond.
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1) At what price will the firm be able to sell the bond? Â
Price of Bond= Present Value of Inflows=341+744= $1085
For workings see below:
Present value of inflows = Present value of ...
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