Question
Bond A has a bond yield of 6.8% (effective annual rate). Doodah Inc. is interested in issuing a consol with an annual coupon payment of
Bond A has a bond yield of 6.8% (effective annual rate). Doodah Inc. is interested in issuing a consol with an annual coupon payment of 8%. What should be its current value if Doodah Inc. wants the new bond to have the same yield? Round your final answer to the nearest cent.
(Hint: a consol is a bond paying coupons in perpetuity)
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Foundations Of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
11th Canadian Edition
1259024970, 978-1259265921
