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Flora Co.'s bonds, maturing in 18 years, pay 12 percent interest on a $1,000 face value. However, interest is paid semiannually. If your required

 

Flora Co.'s bonds, maturing in 18 years, pay 12 percent interest on a $1,000 face value. However, interest is paid semiannually. If your required rate of return is 11 percent, what is the value of the bond? How would your answer change if the interest were paid annually?

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To calculate the value of the bond we can use the present value formula for a bond PV C 1 rnnt F 1 r... blur-text-image

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