The Metchosin Corporation has two different bonds currently outstanding. Bond M has a face value of $60,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $2.700 every six months over the subsequent eight years, and finally pays $3000 every six months over the last six year. Bond N also has a face value of $60,000 and a maturity of 20 years: it makes no coupon payment over the life of the bond. The required return on both those bonds is 12 percent compounded semiannually, what is the current price of bond M and bond N? (Do not round Intermediate calculations. Round the final answer to 2 decimal places.)

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Bond M Bond N Current price $ $ Bond M Bond N Current price $ $

Answer rating: 100% (QA)

Current price of the bond is just the present value of future cash flows that is coupons an... View the full answer