Question

In: Accounting

Which bond will Country Telecom have to pay the most to retire at maturity?

 

Question: Bond prices depend on the market rate of interest, stated rate of interest,

and time.

Requirements

1. Compute the price of the following 8% bonds of Country Telecom.

a. $100,000 issued at 75.25

b. $100,000 issued at 103.50

c. $100,000 issued at 94.50

d. $100,000 issued at 103.25

2. Which bond will Country Telecom have to pay the most to retire at maturity?

Explain your answer.

Solutions

Expert Solution

 

 

 

 

Step 1: Definition of bonds

Bonds are a type of long-term liability that the company issues to fulfil the company’s monetary needs.

 

Step 3: Bond that pays most to retire at maturity

Country Telecom has to pay $100,000 at maturity for all bonds. Hence all bonds have the same maturity value.

 

 

All bonds pay the same at maturity of the bonds.

Sahil Dangi answered 2 years ago
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