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Naivas Co. Ltd wishes to issue a Kshs 60,000, 4-year, 10% bond. The interest is payable annually. Unfortunately, the market rate has risen to 12%.

Naivas Co. Ltd wishes to issue a Kshs 60,000, 4-year, 10% bond. The interest is payable annually. Unfortunately, the market rate has risen to 12%. Clearly, the bond must sell at a discount. But how much is the present value of the bond?

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