ABC company is issuing eight year bond with coupon rate of 6.5% and semi annual coupon payments.If the current market rate for similar bonds is 8 percent.what will be the bond price?. If the company wants to raise $1.25 millions,how many bonds does the company have to sell?

ABC company is issuing eight year bond with coupon rate of 6.5% and semi annual coupon payments.If the current market rate for similar bonds is 8 percent.what will be the bond price?. If the company wants to raise $1.25 millions,how many bonds does the company have to sell?

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter22: Corporations: Bonds

Section: Chapter Questions

Problem 1CE

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Question

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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