A 10-year GM bond has a 10% coupon rate and was issued 4 years ago. If...

A 10-year GM bond has a 10% coupon rate and was issued 4 years ago. If investors require a return of 12%, calculate the bond’s value. Show the (condensed) time line and key steps of two methods. For the NS method, show the abbreviated equation/expression.

Solutions

Expert Solution

Year	CF	PVF@12%	DCF
5	10	0.892857143	8.928571
6	10	0.892857143	8.928571
7	10	0.892857143	8.928571
8	10	0.892857143	8.928571
9	10	0.892857143	8.928571
10	110	0.892857143	98.21429
		Value of Bond	142.8571

jeff jeffy answered 2 years ago

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