4) After performing due diligence on BestBuy, you are advising the company to issue some bonds....
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4) After performing due diligence on BestBuy, you are advising the company to issue some bonds. How much would your investment bank price one BestBuy bond today, if the bond pays $30 coupon payment every 6 months for 6 years (first payment due 6 months from now) and a final payment of $1000 at the end of year 6? Market interest rate for similarly graded bonds with similar time to maturity is 5% per year. (10pts) Tip: This is an uneven cashflow with non-annual compounding TVM problem. 4) After performing due diligence on BestBuy, you are advising the company to issue some bonds. How much would your investment bank price one BestBuy bond today, if the bond pays $30 coupon payment every 6 months for 6 years (first payment due 6 months from now) and a final payment of $1000 at the end of year 6? Market interest rate for similarly graded bonds with similar time to maturity is 5% per year. (10pts) Tip: This is an uneven cashflow with non-annual compounding TVM problem.
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