Question
The 14-year, $1,000 par value bonds of Waco Industries pay 9 percent interest annually. The market price of the bond is $1,065, and the market's
The 14-year, $1,000 par value bonds of Waco Industries pay 9 percent interest annually. The market price of the bond is $1,065, and the market's required yield to maturity on a comparable-risk bond is 7 percent.
a.Compute the bond's yield to maturity.
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?
a.What is your yield to maturity on the Waco bonds given the current market price of the bonds?
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Entrepreneurial Finance
Authors: J. Chris Leach, Ronald W. Melicher
7th Edition
0357442040, 978-0357442043
