An 8%, 8-year bond pays annual coupons and has 5 years to maturity. If the market...

An 8%, 8-year bond pays annual coupons and has 5 years to maturity. If the market interest rate is 9%, calculate the value of the bond. Show the (condensed) time line and key steps of two methods. For the NS method, show the abbreviated equation/expression.

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Expert Solution

Answer :

Annual Coupon Payment = $8

Adjusted Coupon Payment = $8

Number Payments = 5

Adjusted Market Rate = 9%

Present Value Paid at Maturity = $ 64.99

Present Value of Interest Payments = $31.12

Present Value of Bond = $96.11

jeff jeffy answered 2 years ago

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