Question
The 14-year, $1,000 par value bonds of Waco Industries pay 11 percent interest annually.The market price of the bond is $1,125, and the market's required
The 14-year, $1,000 par value bonds of Waco Industries pay 11 percent interest annually.The market price of the bond is $1,125, and the market's required yield to maturity on a comparable-risk bond is 8 percent.
a. Compute the bond's yield to maturity. (Round to two decimal places.)
b. Determine the value of the bond to you given the market's required yield to maturity on a comparable-risk bond.
c. Should you purchase the bond?
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Entrepreneurial Finance
Authors: J. Chris Leach, Ronald W. Melicher
6th edition
1305968352, 978-1337635653, 978-1305968356
