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11) A company issues a three-year $1000 bond with a 5% coupon rate, paying interest annually at the end of the year. You are an

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11) A company issues a three-year $1000 bond with a 5% coupon rate, paying interest annually at the end of the year. You are an investor, and believe the appropriate discount rate is 7%, not 5%. Show the formula for your calculation of the present value of this bond (you don't need to calculate the number). Is your estimate of the present value higher or lower than $1000? (10 points)

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