Question

In: Finance

The Garraty Company just issued a 10-year coupon bond, paying 8% coupon interest and the coupon...

The Garraty Company just issued a 10-year coupon bond, paying 8% coupon interest and the coupon interest will be paid semi-annually. Assume investors’ required rate of return is 6%. What’s the value of this bond?

Solutions

Expert Solution

Calculating Price of Bond,

Using TVM Calculation,

PV = [FV = 1,000, PMT = 40, N = 20, I = 0.06/2]

PV = $1,148.77


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