Due to a number of lawsuits related to toxic wastes, a major chemical manufacturer has recently experienced a market reevaluation. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8 percent, with interest being paid semiannually. The face value of the bond is $1,000. The required simple rate of return on this debt has now risen to 16 percent.

What is the current value of this bond?

Answer rating: 100% (QA)

To calculate the current value of the bond we need to discount the future cash flows ie coupon payme... View the full answer