Question
Linus Inc. issued a 10 year, $10,000,000 bond at a stated rate of 14% and the interest payments are made annually. The market rate of
Linus Inc. issued a 10 year, $10,000,000 bond at a stated rate of 14% and the interest payments are made annually. The market rate of interest for similar bonds is 8%. Compute the price of the bond.
Present value of $1 at 8% interest for 10 periods is .46319
Present value of an ordinary annuity of $1 at 8% interest for 10 periods is 6.71008
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Financial Reporting and Analysis
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
6th edition
9780077632182, 78025672, 77632184, 978-0078025679
