Question:

Pecos Manufacturing has just issued a 15-year, 11% coupon interest rate, $1,000-par bond that pays interest annually.The required return is currently 16%, and the company is certain it will remain at 16% until the bond matures in 15 years.

a. Assuming that the required return does remain at 16% until maturity, find the value of the bond with (1)15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity.

b.All else remaining the same, when the required return differs from the coupon interest rate and is assumed to be constant to maturity, what happens to the bond value as time moves toward maturity?

Explain in light of the following graph in th picture above

Bond value and time-Constant required returna Pecos Manufacturing has just seda 15-year, 11% coupon interest rate, 51,000 par bond that pay rest at the required retum is currently to, and the company is certain remain at 18% the bond matures in 15 years Assuming that the required retumdoes remain at 10 maturity and the value of the bond with (1) 15 year, (2) 12 years, yes(4), (5) 3 years (6) year to my b. Al els romaning the same, when the required retum differs from the conterest rate and is usumed to be constant to many what happens to the bond value to move toward mounty Explaining of the following .. (1) The value of the bond win 15 years to matury Round to the newest cont) Graply Chart 100 000 Bond 500 11 Print Dono Enter your answer in the answer box and then click Check Answer parts remaining