A firm has an issue of $1,000 par value bonds with a 9% stated interest rate outstanding. The issue pays interest annually and has 20 years remaining to its maturity date. If bonds of similar risk are currently earning 11% the firms bond will sell for _________ today.
D. $716.67© BrainMass Inc. brainmass.com June 4, 2020, 12:16 am ad1c9bdddf
Required rate of return=r=11%
The solution describes the steps to calculate fair value of a coupon paying bond.