IBC company has a bond issue on the market with a $1,000 face value, which pays a 13.5% annual coupon that will mature on this date 20 years from now. If the current required rate of return on debt such as IBC's is 11%, what is the market value of IBC's bond?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 9P
Question
IBC company has a bond issue on the market with a $1,000 face value, which pays a
13.5% annual coupon that will mature on this date 20 years from now. If the current
required rate of return on debt such as IBC's is 11%, what is the market value of IBC's
bond?
Transcribed Image Text:IBC company has a bond issue on the market with a $1,000 face value, which pays a 13.5% annual coupon that will mature on this date 20 years from now. If the current required rate of return on debt such as IBC's is 11%, what is the market value of IBC's bond?
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