Question
The McKeegan Corporation has two different bonds currently outstanding. Bond M has a face value of $11,000 and matures in 20 years. The bond makes
The McKeegan Corporation has two different bonds currently outstanding. Bond M has a face value of $11,000 and matures in 20 years. The bond makes no payments for the first 8 years, then pays $800 every six months over the subsequent 4 years, and finally pays $1,100 every six months over the last 8 years. Bond N also has a face value of $11,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond. If the required return on both these bonds is 9 percent compounded semiannually, the current price of Bonds M and N is $ _________ and $ __________, respectfully.
Please help me answer this, and if possible please include how. Thank you so much!
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