Find the present value of percent

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Question - Katie Pairy Fruits Inc. has a $2,900 21-year bond outstanding with a nominal yield of 18 percent (coupon equals 18% × $2,900 = $522 per year). Assume that the current market required interest rate on similar bonds is now only 12 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Required -

a. Compute the current price of the bond.

b. Find the present value of 6 percent × $2,900 (or $174) for 21 years at 12 percent. The $174 is assumed to be an annual payment. Add this value to $2,900.

Reference no: EM133026320

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