question archive Peking Duct Tape Company has outstanding a $1,000-face-value bond with a 14 percentcoupon rate and 3 years remaining until final maturity
Peking Duct Tape Company has outstanding a $1,000-face-value bond with a 14 percentcoupon rate and 3 years remaining until final maturity
Subject:AccountingPrice:2.87 Bought7
Peking Duct Tape Company has outstanding a $1,000-face-value bond with a 14 percentcoupon rate and 3 years remaining until final maturity. Interest payments are made semiannually. What value should you place on this bond if your nominal annual required rate of return is 14 percent??
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Answer:
$999.69 or $1,000
Value should equal $1,000 when the nominal annual required return equals the coupon rate. Our answer differs from $1,000 only beacuse of rounding in the Table values used.
