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What is the price of the bonds

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Reference no: EM13490151

Rocky Road Company sold $5 million of six-year six percent debentures (bonds) on January 1, 2009. The bonds sold to yield an effective rate of seven percent. Interest is paid annually on December 31st.

a.  What is the price of the bonds? (Show calculations clearly.)

b.  What would be the price of the bonds ifthey were sold to yield a real rate of five percent? (Show calculations clearly.)

Reference no: EM13490151

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