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Your company wants to pay off some long-term debt, so you decide to buy back some conventional 10-year bonds that you issued 8 years ago.
Your company wants to pay off some long-term debt, so you decide to buy back some conventional 10-year bonds that you issued 8 years ago. The face value of the bonds is $700, and the bonds were issued at a 6% coupon rate interest rate). Currently, other companies with the same risk profile as your company are offering new 2-year bonds at an interest rate of 10%. Assume that you are at the start of year 9, i.e., the gth interest payment has been made. What is a fair offer to buy back the bonds
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