Value of bonds
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Two bonds outstanding, both pay $100 annual interest plus $1000 at maturity. Bond 1 has a maturity of 15 years, bond 2, (1) year. What is the value of each of these bonds at the going interest rate of:
1. 5%
2. 8 %
3. 12 %
Assume there is only one more interest payment to be made on bond 2.
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Solution Summary
The solution calculates the value of two bonds at different interest rates.
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