Question
sir please solve it A company has to pay $100,000 5 years from now. The current market rate of interest is 6%. The company uses
sir please solve it
A company has to pay $100,000 5 years from now. The current market rate of interest is 6%. The company uses a 8.6% annual coupon bond redeemable at par after 6 years to fund this liability.
(a) Calculate the face value and the Macaulay duration of the bond.
(b) Is the bond sufcient to meet the liability when there is a one-time change in interest rate to 5.5% after 2 years?
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
5th edition
1111527369, 978-1111527365
