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

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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 thebonus b. How does the value change if your required rate of return:1. Increase to 15% 2. Decrease to 8% c. Assume that the bondmatures in 5 years instead of 15 years. Re-compute your answers inpart b.

Answer & Explanation Solved by verified expert
4.4 Ratings (1021 Votes)
a Value of bond is calculated using PV function in Excel rate 12 required return nper 15 number of interest payments years to maturity pmt 100 annual interest fv 1000 face value receivable on maturity PV is calculated to be 86378    See Answer
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