OnJanuary1 Year1 you are considering the purchase of 10 000 of Colin Company
OnJanuary1,Year1,you are considering the purchase of $10,000 of Colin Company’ s8% bonds .
The bonds are duein 10 years, with interest payable semiannually on June30 and effective December31. Based on your analysis of Colin, you determine that a 6% (required) interest rate is appropriate.

Required:
a. Compute the price you will pay for the bonds using the present value model (round the answer to the nearest dollar).
b. Recompute the price in a if your required rate of return is 10%.
c. Describe risk and explain how it is reflected in your required rate of return.

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