A company issued, 8 years ago, bonds with an annual coupon rate of 8% and a face value of $1000. The coupons are semi-annual and the maturity at the time of issue was 20 years. a. If the semi-annually capitalized coupon rate required is 10%, what is the current value of these bonds? b. If the required semi-annual capitalized coupon rate were to increase to 12%, what would be the value of these bonds? c. If the required semi-annual capitalized coupon rate were to increase to 8%, what would the value of these bonds be?

Answer rating: 100% (QA)

To calculate the current value of the bonds we can use the present value formula for bonds The formu... View the full answer