Question 4 300000 pointsSave Answer What is the value of a 6

Question 4 3.00000 pointsSave Answer What is the value of a 696, 10-year bond with a redemption value of $10,000 that pays dividends semi-annually? Assume the purchaser wishes to earn an 8% return.

Solution

Maturity value 10000 Semi annual cash interest 300 (10000*6% *6/12) Annuity factor f fro 20 periiods 13.5903 Present value factor for 20th period 0.4564 Present value of Maturity 4564 Present value of Interest 4077.09 Value of Bonds 8641.09