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Terms of a bond: Face amount - $1,000 Redemption amount - $1,000 Term - 20 years Coupons - 5.0%, payable annually The bond is issued
Terms of a bond:
Face amount - $1,000
Redemption amount - $1,000
Term - 20 years
Coupons - 5.0%, payable annually
The bond is issued at a discount, which is amortized over the 20-year life of the bond.
The amount the bond is written up in the 16th year is 50% greater than the amount the bond is written up in the 11th year.
Compute the price of the bond at issue.
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