Computation of the current price of the bond

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Computation of the current price of the bond

Use the following information to answer the next two problems

1. The Wallace Company has issued a 10-year, $1,000 bond, which pays 12% interest annually. If your required annual rate of return for an investment of this risk is 16%, what is the value of this bond to you?

2. What is the value of the same bond if the interest is paid semi-annually?

Reference no: EM1315671

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