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Q4. Katie Pairy Fruits Incorporated Katle Palry Frults Incorporated has a $2,400 16-year bond outstanding with a nomlnal yleld of 17 percent (coupon equals 17%$2,400=$408
Q4. Katie Pairy Fruits Incorporated
Katle Palry Frults Incorporated has a \$2,400 16-year bond outstanding with a nomlnal yleld of 17 percent (coupon equals 17%$2,400=$408 per year). Assume that the current market required interest rate on simlar bonds is now only 12 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financlal calculator methods. a. Compute the current price of the bond. Note: Do not round Intermedlate calculations. Round your final answer to 2 decimal places. Assume Interest payments are annual. b. Find the present value of 5 percent $2,400 (or $120 ) for 16 years at 12 percent. The $120 is assumed to be an annual payment. Add this value to $2,400. Note: Do not round Intermedlate calculations. Round your final answer to 2 decimal places. Assume Interest payments are annualStep by Step Solution
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