Alice Kitchen's,Inc.bonds have a 10% coupon rate with semiannual coupon payments.They have 12 and 1/2 years to maturity and a par value of $1,000.Compute the value of Alice's bonds if investors' required rate of return is 8%.

Question

Quizplus · Accepted Answer

The bond's value is calculated using the present value of its future cash flows, which include semiannual coupon payments and the par value at maturity. With a coupon rate of 10% and a required return of 8%, the bond's value is higher than its par value, and $1,156.22 is the correct calculation.