What is the value of a $1,000 par value Consul perpetual bond with a 6 percent coupon rate if the required rate of return is 9 percent?
A) $1,000.00
B) $666.67
C) $333.33
D) $540.00

Question

Quizplus · Accepted Answer

To calculate the value of the bond, we can use the formula:

Bond Value = Coupon Payment / Required Rate of Return

The coupon payment is 6% of the $1,000 par value, or $60 per year. So:

Bond Value = $60 / 0.09 = $666.67

What Is the Value of a $1,000 Par Value Consul