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It is now April 1992, and Toliwe Corporation is considering the purchase of an outstanding corporate bond that was issued exactly 3 years ago. The
It is now April 1992, and Toliwe Corporation is considering the purchase of an outstanding corporate bond that was issued exactly 3 years ago. The bond has a 9.25% annual coupon and 30 years original maturity (it matures in April, 2019). The bond has a call provision and allows the issuer to call off the bond 12 years from the issue date with the call price of K1, 090. Currently similar financial instruments with similar level of risk justify a 7.5% rate of return How much worth is the bond today if the issuer does call off the bond 12 vears from the issue date
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