Cary\'s Company bonds have a 12% coupon rate. Interest is paidsemi-annually. The

Question

Cary's Company bonds have a 12% coupon rate. Interest is paidsemi-annually. The bonds have a par value of $1,000 and will mature8 years from now. Compute the value of the bonds if investors'required rate of return is 8%.
a. $1,114.70 b. $1,233.05 c. $894.06 d. $941.27 Cary's Company bonds have a 12% coupon rate. Interest is paidsemi-annually. The bonds have a par value of $1,000 and will mature8 years from now. Compute the value of the bonds if investors'required rate of return is 8%.
a. $1,114.70 b. $1,233.05 c. $894.06 d. $941.27

Explanation / Answer

$1233.05

(b)Discount the semi annual cash flows at 12 percent plus thematurity value at 12 percent.
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