Exhibit 11.2
Use the Information Below for the Following Problem(S)
A major manufacturer is reevaluating its bonds since it is planning to issue a new bond in the current market. The firm's outstanding bond issue has 7 years remaining till maturity. The bonds were issued with an 8 percent coupon rate (paid quarterly) and a par value of $1,000. The required rate of return is 10 percent.
-Refer to Exhibit 11.2.What is the current value of these securities?
A) $900.18
B) $1151.92
C) $972.52
D) $1113.63
E) $904.00

Question

Quizplus · Accepted Answer

$$\left. P = 20 \left[ \frac { 1 - \frac { 1 } { ( 1 + .025 ) ^ { 28 } } } { .025 } \right] + \frac { 1000 } { ( 1 + .025 ) ^ { 28 } } \right] \$ 900.17$$

Exhibit 11.2 Use the Information Below for the Following Problem(S)