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What is the price of the bonds today

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Question - Assets, Inc., plans to issue $8 million of bonds with a coupon rate of 6 percent, a par value of $1,000, semiannual coupons, and 30 years to maturity. The current market interest rate on these bonds is 10 percent. In one year, the interest rate on the bonds will be either 10 percent or 4 percent with equal probability. Assume investors are risk-neutral. If the bonds are noncallable, what is the price of the bonds today?

Reference no: EM132954843

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