BA Corp is issuing a 10-year bond with a coupon rate of 6.04 percent. The interest...

BA Corp is issuing a 10-year bond with a coupon rate of 6.04 percent. The interest rate for similar bonds is currently 5.57 percent. Assuming annual payments, what is the value of the bond?

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Expert Solution

Computation Of Bond Price

a	Annual Coupon Amount	$ 60.40

b	Present Value Annuity Factor for (10 Years,5.57%)	7.512382
c	Present Value Of Annual Interest (a*b)	$ 453.75
d	Redemption Value	$ 1,000.00
e	Present Value Of (10 Years,5.57%)	0.58156
g	Present Value Of Redemption Amount (d*e)	$ 581.56
f	Bond Value (c+g)	$ 1,035.31

jeff jeffy answered 2 years ago

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