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If the relevant cost of capital is 10% throughout, what are the current market values of the following bonds with a face value of 100?
If the relevant cost of capital is 10% throughout, what are the current market values of the following bonds with a face value of 100?
a) An irredeemable (perpetual) bond with a 3.5% coupon?
b) A zero-coupon bond which will be redeemed at par in 8 years time?
c) A bond with a coupon of 5% which is to be redeemed at par in 5 years time?
d) A bond which will pay an 8% coupon starting three years from now up until redemption in year 20?
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