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Assume that the firm has a bond outstanding that has a coupon rate of 6% and...

Assume that the firm has a bond outstanding that has a coupon rate of 6% and 20 years until maturity. The face value of the bond is $10,000,000 and the coupon payments are made annually. What is the present value of the bond (i.e. current price)? Assume the cost of equity is 12%, the cost of debt is 4% and WACC is 10%. Show calculation

Answers: a.

$6,594,574.51

b.

$12,718,065.27

c.

$5,518,333.83

d.

$8,276,991.20

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