Considering buying corporate bond

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Reference no: EM131011633

An investor is considering buying a 20-year corporate bond. The bond has a face value of $1000 and pays 6% interest per year in two semiannual payments. THus the purchaser of the bond will receive $30 every 6 months in addition to $1000 at the end of 20 years, along with the last $30 interest payment.

If the investor wants to receive $8 interest, compounded semi annually, how much would he or she be willing to pay for the bond. Please include a cash flow diagram. Along with the original formula used.

Reference no: EM131011633

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