A young engineering company is a subcontractor in an effort to develop technology that will reliably detect and respond to release of a nuclear weapon. The company is in need of additional funding and issues a series of $1,000 face value bonds that pay a nominal annual rate of 6% with quarterly payments. The bond matures in 6 years.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 9P
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A young engineering company is a
subcontractor in an effort to develop
technology that will reliably detect and
respond to release of a nuclear weapon. The
company is in need of additional funding and
issues a series of $1,000 face value bonds that
pay a nominal annual rate of 6% with quarterly
payments. The bond matures in 6 years.
Transcribed Image Text:A young engineering company is a subcontractor in an effort to develop technology that will reliably detect and respond to release of a nuclear weapon. The company is in need of additional funding and issues a series of $1,000 face value bonds that pay a nominal annual rate of 6% with quarterly payments. The bond matures in 6 years.
You buy the bond for $1,000, and decide
to sell it immediately after the 16th
interest payment. If you want to earn 12%
per year compounded quarterly on your
investment, what must be your selling
price?
Click here to access the TVM Factor Table
calculator.
LA
$
Carry all interim calculations to 5 decimal
places and then round your final answer
to 2 decimal places. The tolerance is
±0.05.
Transcribed Image Text:You buy the bond for $1,000, and decide to sell it immediately after the 16th interest payment. If you want to earn 12% per year compounded quarterly on your investment, what must be your selling price? Click here to access the TVM Factor Table calculator. LA $ Carry all interim calculations to 5 decimal places and then round your final answer to 2 decimal places. The tolerance is ±0.05.
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