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Bonus Value. You have a bond that pays $ 100 of annual interest, with a value...

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Question

Finance

Bonus Value. You have a bond that pays $ 100 ofannual interest, with a value of $ 1,000 and matures in 15 years.Your required rate of return is 12%.

a. Calculate the value of the bonus

b. How does the value change if your required rate ofreturn:

1. Increase to 15%

2. Decrease to 8%

Answer & Explanation Solved by verified expert
3.9 Ratings (585 Votes)
a Value Coupon 1 1 1 rn r FV 1 rn Value 100 1 1 1 01215 012 1000 1 01215 Value 100 6810864 182696261 Value 86378 b 1 Increase to 15 Value 100 1 1 1    See Answer
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