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 will be the value of these securities in one year if the required return is 6 percent?
A) $1151.92
B) $972.52
C) $1100.15
D) $900.18
E) $936.72

Question

Quizplus · Accepted Answer

$$P = 20 \left[ \frac { 1 - \frac { 1 } { ( 1 + .015 ) ^ { 24 } } } { .015 } \right] + \frac { 1000 } { ( 1 + .015 ) ^ { 24 } } = \$ 1100.15$$

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