Question
Rob 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
Rob 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.
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.
Round off all of your numerical responses to two (2) decimal points.
What is the value of the bond with 3 years to maturity?
What is the value of the bond with 1 year to maturity?
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