Question: 1. Thandi has two bond options available. Both bonds pay $100 annual interest plus $1000 at maturity. Bond A has a maturity of 10 years

1.

Thandi has two bond options available. Both bonds pay $100 annual interest plus

$1000 at maturity. Bond A has a maturity of 10 years and Bond B has a maturity

of 15 years.

What is the present value of each of these bonds when the going rate of interest is

a) 6%, and b) 11%?

a) 6%

Present Value A =

Present Value B =

Which bond is better?

b)

11%

Present Value A =

Present Value B =

Which bond is better?

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