Question
The Garcia Companys bonds have a face value of $1,000, will mature in ten years, and carry a coupon rate of 16 percent. Assuming that
The Garcia Companys bonds have a face value of $1,000, will mature in ten years, and carry a coupon rate of 16 percent. Assuming that the interest payments are made semi-annually, answer the following:
a. Determine the present value of the bonds cash flows if the required rate of return is 16.64 percent.
Answer: The periodic interest rate is the value of r such that = The semiannual coupon = The number of periods = Price =
b.. How would your answer change if the required rate of return is 12.36 percent?
Answer: The periodic interest rate is the value of r such that = Price =
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