Computation of value of bond

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Computation of value of bond

Wilson Company will issue $300,000,000 of 7%, $1000 Par bonds on November 15, 2004. The bonds will pay interest semiannually and mature on November 15, 2011.

a) What is the value of an individual bond from this issue to an investor who purchases the Wilson bond on the date of issue (November 15, 2004) assuming they require an 8% return?

b) Without doing the calculation would the value of the bond go up, go down or stay the same if the required interest rate increased to 12%. Explain.

c) Without doing the calculation would the value of the bond go up, go down or stay the same if the maturity date was changed to November 15, 2009. Explain.

Reference no: EM1314356

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