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Blossom Corp is issuing a 10-year bond with a coupon rate of 11 percent. The interest rate for similar bonds is currently 7 percent. Assuming annual payments, what is the value of the bond
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Blossom Corp is issuing a 10-year bond with a coupon rate of 11 percent. The interest rate for similar bonds is currently 7 percent. Assuming annual payments, what is the value of the bond

User Najera
by
4.3k points

1 Answer

7 votes

Answer:

$1,280.94

Step-by-step explanation:

FV= $1000

PMT = 11% * $1000 = $110

N = 10 Years

I/Y = 7%

Using Excel, Present value of bond ($1,000, $110, 10, 7%) = $1280.9433

Hence, the present value of bond = $1,280.94

User Aziz Bouaouina
by
3.9k points
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