Assuming interest rates are 5% for AAA Rated Corporate bonds, calculate the value of your bond relative to this interest rate using equation 11.2 in the text. Assume that i = 5%. Is your bond selling for a premium or at a discount based on your calculation? What other factors can impact bond valuation?

P 0

= nt 1 I i( 1 + i ) t+ PV n( 1 + i ) n

= Presentvalueofcouponpayments + Presentvalueofbond ' sparvalue