How much should he be willing to pay for this bond

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Reference no: EM131617963

Jorge has carefully studied the prospectus for a ten-year $10,000 floating-rate par-value bond with annual coupons. He anticipates that the coupon rates will be level at 5.5% for the first five years, then go up by a factor of 1.04 each year. How much should he be willing to pay for this bond if he wishes a yield rate of at least 7% for the ten-year investment period?

(DO NOT use Excel to solve, show steps with formulas)

Reference no: EM131617963

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