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A 4-year bond is current selling at $1,000. The bond will pay the bondholder four payments: $80 annual interest at the end of each year
A 4-year bond is current selling at $1,000. The bond will pay the bondholder four payments: $80 annual interest at the end of each year for 4 years and an additional $1,000 at the end of year 4. The market required interest rate for the bond is 7.5%.
A) What is the future value of the bond?
B) What does the timeline for the bondholder payments look like? (how much do they make every year)
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