Monday 11 June 2012

Terminator bug company bonds have a 14% coupon rate. Interest is paid semi-annually.

Terminator bug company bonds have a 14% coupon rate. Interest is paid semi-annually. The bonds have a par value of $1000 and will mature 10 years from now. Compute the value of terminator bonds if investors’ required rate of return is 12%, rounded to the nearest dollar.
a. $1115
 b. $1149
c. $1000
d. $894
 

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