Question
Sun company has outstanding a 10 percent bond issue with a face of $1,000 per bond and three years to maturity. Interest is payable annually.
Sun company has outstanding a 10 percent bond issue with a face of $1,000 per bond and three years to maturity. Interest is payable annually. The bonds are privately held by Fire Insurance Company. Fire wishes to sell the bonds and is negotiating with another party. It estimates that, in current market conditions, the bonds should provide a (nominal annual) return of 20 percent.
What price per bond should Fire be able to realize on the sale is?
((PVIFA20%, 3) =2.106,(PVIF20%, 3)=0.579)
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Fundamentals Of Financial Management
Authors: James Van Horne, John Wachowicz
13th Revised Edition
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