Assignment on valuing bonds

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Valuing Bonds

Tesla raised money to finance an expansion of their factory in Nevada, so they currently have 2 bonds outstanding. Bond 1 has a face value of $30,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $800 every six months over the subsequent eight years, and finally pays $1,000 every six months over the last six years. Bond 2 also has a face value of $30,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond. If the required return on both these bonds is 6.4 percent compounded semiannually, what is the current price of each bond - Bond 1 and Bond 2?

Reference no: EM133073566

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