Bond valuationlong dash—zero coupon) The Latham Corporation is planning on issuing bonds that pay no interest but can b...
Bond valuationlong dash—zero coupon)
The Latham Corporation is planning on issuing bonds that pay no interest but can be converted into $1,000 at maturity, 8 years from their purchase. To price these bonds competitively with other bonds of equal risk, it is determined that they should yield 7 percent, compounded annually. At what price should the Latham Corporation sell these bonds?
The price of the Latham Corporation bonds should be $_____.(Round to the nearest cent.)
Homework Answers
Price of bonds=$1000/(1+yield)^time period
=$1000/(1.07)^8
=$1000*0.582009105
=$582.01(Approx).
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