Lowell Corp. sells $100,000 of bonds to private investors. The bonds are due in five years,...
Lowell Corp. sells $100,000 of bonds to private investors. The bonds are due in five years, have an 6% coupon rate, and interest is paid semiannually. The bonds were sold to yield 6%. What proceeds does Lowell receive from the investors? A. $100,000 B. $112,000 C. $91,889 D. $108,530 E. None of the above
Homework Answers
Bond Par Value = $100,000
Coupon Rate = 6% semi-annually
Time to Maturity = 5 years
YTM = 6%
Calculating Present Value,
As Coupon Rate = Yield to Maturity of Bond
Price = Par Value
Present Value of Bond = $100,000
So,
Lowell Corp. will receive $100,000 from investors.
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Lowell Corp. sells $100,000 of bonds to private investors. The
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