34 You are considering buying bonds in ACBB, Inc. The bonds have a par value of...
34
You are considering buying bonds in ACBB, Inc. The bonds have a par value of $1,000 and mature in 15 years. The annual coupon rate is 13.0% and the coupon payments are annual. If you believe that the appropriate discount rate for the bonds is 18.0%, what is the value of the bonds to you?
| $864.56 |
| $745.42 |
| $1,323.12 |
| $1,474.34 |
| $810.95 |
Homework Answers
Par Value of Bond = $1000
Period = 15 years
Coupon payment = 13% per annum
Discount Rate = 18%
Using TVM Calculation,
PV of Bond = $745.42
Option B is correct.
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34
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