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Calculate the market value of bond today

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Reference no: EM131910130

Crown Enterprises recently issued a bond that has a $1,000 face or par value. This bond has a coupon interest rate of 8% and has a life of 10 years. If interest is paid annually on this bond, calculate the market value today at t = 0 of this bond, assumed a required return for this bond of 6%.

1,000  8%  10yr

a. Now, assume that the required return on this bond increases to 10%. Assume also that the bond pays interest semi-annually, rather than annually. Given this new information, calculate the market value of this bond today at t = 0.

Home and Hardware, Inc. recently issued a bond with a $20,000 par or face value. The bond has a five-year life and a coupon interest rate of 6%. Assume that the required return on the market for this bond is 8%. Given this information, calculate the market value of this bond today. The bond pays interest annually.

Reference no: EM131910130

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