Determine the present value of the bond

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Reference no: EM131933307

Question: 1. a) Peter can borrow money to buy a house at 8% annual interest. He is able to make end-of-year payments of $8,000 to repay the loan over ten years. Determine the amount of money he can borrow under these conditions in thousands of dollars.

b) A firm issues a 10-year bond with a face value of $1,000 and annual coupon payments of $100. Determine the yield to maturity required to make the present value of the bond equal to $1,000.

c) A firm issues a 10-year bond with a face value of $1,000 and annual coupon payments of $100. The existing discount rate is 8% p.a. Determine the present value of the bond.

Reference no: EM131933307

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