Question
Ron Rhodes calls his broker to inquire about purchasing a bond of Golden Years Recreation Corporation. His broker quotes a price of $1,100. Ron is
Ron Rhodes calls his broker to inquire about purchasing a bond of Golden Years Recreation Corporation. His broker quotes a price of $1,100. Ron is concerned that the bond might be overpriced based on the facts involved. The $1,000 par value bond pays 10 percent interest, and it has 15 years remaining until maturity. The current yield to maturity on similar bonds is 8 percent.
(a) | Calculate the present value of the bond. Use Appendix B and Appendix D.(Round "PV Factor" to 3 decimal places, intermediate and final answer to 2 decimal places. Omit the "$" sign in your response) |
Present value | $ |
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