Patsy Tebeau is considering investing in a bond currently selling for $8,785 07 The bond has four years to maturity, a $10,000 face value, and an 8 coupon rate The next annual interest payment is due one year from today The appropriate discount rate for investments of similar risk is 10 a Calculate the intrinsic value of the bond Based on this calculation, should Patsy purchase the bond b Calculate the yield to maturity of the bond Based on this calculation, should Patsy purchase the bond

Question: Patsy Tebeau is considering investing in a bond currently selling for $8,785.07. The bond has four years to maturity, a $10,000 face value, and an

Patsy Tebeau is considering investing in a bond currently selling for $8,785.07. The bond has four years to maturity, a $10,000 face value, and an 8% rate. The next annual interest payment is due one year from today. The appropriate for investments of similar risk is 10%.
a. Calculate the intrinsic value of the bond. Based on this calculation, should Patsy purchase the bond?
b. Calculate the yield-to-maturity of the bond. Based on this calculation, should Patsy purchase the bond?

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