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Las Paletas Corporation has two different bonds currently outstanding. Bond M has a face value of $10,000 and matures in 20 years. The bond makes
Las Paletas Corporation has two different bonds currently outstanding. Bond M has a face value of $10,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $1,200 every six months over the subsequent eight years and finally pays $1,500 every six months over the last six years. Bond N also has a face value of $10,000 and a maturity of 20 years: it makes no coupon payments over the life of the bond. The required return on both these bonds is 6% compounded semiannually.
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