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The Mayflower Corporation has two different bonds currently outstanding. Bond A has a face value of $50,000 and matures in 5 years. The bond makes
The Mayflower Corporation has two different bonds currently outstanding. Bond A has a face value of $50,000 and matures in 5 years. The bond makes no payments for the first 2 years, then pays $2,000 every 6 months over the next 3 years until maturity. Bond B also has a face value of $50,000 and matures in 5 years; it makes $750 of coupon payment every 6 months over the life of the bond. If the annual required rate of return for both of these bonds is 10%, what is the value of Bond A? Bond B?
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