Effective interest rate will she receive on her investment

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Reference no: EM131048608

A $25,000 par value bond which carries a 16% bond dividend rate and pays dividends quarterly is being offered for sale. The bond will mature eight years after it is sold. What is the highest amount that an investor, who plans to earn a return of at least 12% on her investments, would be willing to pay for the bond? II the investor buys the bond for the price that will earn a return of exactly 12%, what effective interest rate will she receive on her investment?

Reference no: EM131048608

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