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Question: The Garcia Companys bonds have a face value of $1,000, will mature in ten years, and carry a coupon rate of 16 percent. Assuming
Question: |
The Garcia Companys bonds have a face value of $1,000, will mature in ten years, and carry a coupon rate of 16 percent. Assuming that the interest payments are made semi-annually, answer the following: |
a. Determine the present value of the bonds cash flows if the required rate of return is 16.64 percent. |
Answer: The periodic interest rate is the value of r such that = The semiannual coupon = The number of periods = Price = |
b. How would your answer change if the required rate of return is 12.36 percent? |
Answer: The periodic interest rate is the value of r such that = Price = |
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