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Effective annual interest rate

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Reference no: EM131550700

You are considering a 25-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually.

If you require an "effective" annual interest rate (not a nominal rate) of 9.88%, how much should you be willing to pay for the bond? Do not round intermediate steps. Round your answer to the nearest cent.

Reference no: EM131550700

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