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New Century Computer issued $450 million of AA-rated 30 year $1,000 par bonds on this date in 2012, which have a coupon interest rate of
New Century Computer issued $450 million of AA-rated 30 year $1,000 par bonds on this date in 2012, which have a coupon interest rate of 9% and pay interest annually. A decrease in the inflation rate by 2% and a decrease in corporate risk, (beta), have cause the required return on these bonds to be only 5%. Find the current price of a bond.
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