You are offered a R1,000 par value bond which has a stepped-up coupon interest rate.The annual coupon rate is 10 percent coupon, payable semi-annually (R50 each 6 months) for the first 15 years, and then the annual coupon increases to 13 percent, also payable semi-annually, for the next 15 years.The first interest payment will be made 6 months from today, and the R1,000 principal amount will be returned at the end of Year 30.You currently have savings in an account which is earning a 9 percent simple rate, but with quarterly compounding; this is your opportunity cost for purposes of analysing the bond.What is the value of the bond to you today?

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The Answer of You are offered a R1,000 par value bond which has a stepped-up coupon interest rate.The annual coupon rate is 10 percent coupon, payable semi-annually (R50 each 6 months) for the first 15 years, and then the annual coupon increases to 13 percent, also payable semi-annually, for the next 15 years.The first interest payment will be made 6 months from today, and the R1,000 principal amount will be returned at the end of Year 30.You currently have savings in an account which is earning a 9 percent simple rate, but with quarterly compounding; this is your opportunity cost for purposes of analysing the bond.What is the value of the bond to you today?

You Are Offered a R1,000 Par Value Bond Which Has