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Seven years ago Apollo 30 year bonds were issued with a coupon rate of 18% paid semiannually. The bond has a call provision that allows
Seven years ago Apollo 30 year bonds were issued with a coupon rate of 18% paid semiannually. The bond has a call provision that allows the corporation to call the bond any time after its 10th year. The bond indenture requires the company to pay a penalty of one years interest to compensate bond holders if a call is initiated. Current interest rates are 11%. What should the bonds be worth today if the company calls the bond issue in its tenth year?
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