What is the maximum price you would pay for the bond

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Reference no: EM132005987

Creative Financing, Inc., is planning to offer a $1,000 par value 15-year maturity bond with a coupon interest rate that changes every 5 years. The coupon rate for the first 5 years is 8 percent, 10 percent for the next 5 years, and 12 percent for the final 5 years. If you require an 13 percent rate of return on a bond of this quality and maturity, what is the maximum price you would pay for the bond? (Assume interest is paid annually at the end of each year.) Use Table II and Table IV to answer the question. Round your answer to the nearest dollar.

Reference no: EM132005987

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