Asked by Debbie
Assume WhirledCom has an issue of 15 year $1000 par value bonds that pay 6% interest, semiannually Futher asssume that today's required rate of return on htese bonds is 9% How much would these bonds be worth today? Round off to the nearest $1
Answers
Answered by
Henry
$1,000. @ 9% for 15 years, compounded sem0-annually.
Pt = Po(1+r)^n.
r = (9% / 2) /100% = 0.045 = S-APR expressed a a decimal.
n = 2comp./yr * 15yrs = 30 Compounding periods.
Pt = $1000(1.045)^30 = $3745.
Pt = Po(1+r)^n.
r = (9% / 2) /100% = 0.045 = S-APR expressed a a decimal.
n = 2comp./yr * 15yrs = 30 Compounding periods.
Pt = $1000(1.045)^30 = $3745.
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