Question: Mohan Perera is considering investing in a bond currently selling for Rs. 9,730. The bond has five years to maturity, a Rs. 10,000 face value,

Mohan Perera is considering investing in a bond currently selling for Rs. 9,730. The bond has five years to maturity, a Rs. 10,000 face value, and a 10 % coupon rate. The next annual interest payment is due one year from today. The approximate discount factor for investments of similar risk is 9%. Calculate the intrinsic value of the bond. Based on this calculation, should Mohan Perera purchase the bond?

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