# What is the value of a 20-year, 7% annual coupon bond if Kd equals 9%? What is the value if inflation increases 3%? What is the value if inflation decreases 3%? Show formulas and entries on a financial calculator.

What is the value of a 20-year, 7% annual coupon bond if Kd equals 9%? What is the value if inflation increases 3%? What is the value if inflation decreases 3%? Show formulas and entries on a financial calculator.

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#### Solution Preview

In a calculator:

Number of periods = 20

Future value = 1000

annual payment = 1000*7% = ...

#### Solution Summary

The value of inflation for annual coupons are determined. The value of the coupons if inflation increases is computed.

$2.19