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Friday Inc. issues bonds with a 20-year maturity. The bond makes semi-annual coupon payments of $30 each until the end of year 10. After that,
Friday Inc. issues bonds with a 20-year maturity. The bond makes semi-annual coupon payments of $30 each until the end of year 10. After that, the bond makes semi-annual coupon payments of $40 each until maturity. However, due to cash constraints, the firm makes no coupon payments on the bond in year one, and instead pays these coupon at maturity. If investors require an 8% annual interest rate compounded semi-annually, what is the bond price at the beginning of year 4?
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