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Cox Media Corporation pays a 10 percent coupon rate on debentures that are due in 15 years. The current yield to maturity on bonds of
Cox Media Corporation pays a 10 percent coupon rate on debentures that are due in 15 years. The current yield to maturity on bonds of similar risk is 8 percent. The bonds are currently callable at $1,100. The theoretical value of the bonds will be equal to the present value of the expected cash flow from the bonds. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Find the market value of the bonds using semiannual analysis. Note: Ignore the call price in your answer. Do not round intermediate calculations and round your answer to 2 decimal places. Price of the bond b. Do you think the bonds will sell for the price you arrived at in part a? Yes O NO
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