How much should you pay for a ara corporation bond

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Reference no: EM132713787

The ARA Corporation bonds have a coupon of 14%, pay interest semi-annually, and they will mature in 7 years. Your required rate of return for such an investment is 10% annually.

Problem 1: How much should you pay for a $1,000 ARA Corporation bond?

Problem 2: If you are given RM90,000, how many units of bond can you purchase?

Problem 3: What is the yearly interest income for this bond if purchase it with RM90,000?

Reference no: EM132713787

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