To expand its business, the Austin factory would like to issue a bond with par value of
Fantastic news! We've Found the answer you've been seeking!
Question:
To expand its business, the Austin factory would like to issue a bond with par value of
$1,000, coupon rate of 10 percent, and maturity of 10 years from now.
a. What is the value of the bond if the required rate of return is 8 percent?
b. What is the interest rate at which the value of the bond is going to be the same as
par value ($1000)?
c. Find out the YTM if the bond is currently traded at $887?
Expert Answer:
Posted Date:
