A firm has an issue of $1000 par value bonds with a 12% stated interest rate outstanding. The issue pays interest annually and has 10 years remaining to its maturity date. If bonds of similar risk are currently earning 8%, how much will the firm's bond sell for?© BrainMass Inc. brainmass.com June 3, 2020, 11:29 pm ad1c9bdddf
The bonds would sell for the present value of interest and principal. The annual interest is $1,000 X 12%=120, principal amount is $1,000, years to maturity ...
The solution explains how to calculate the selling price of bonds