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What would happen to the price of Johnson Inc

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Reference no: EM133061632

Question - Assume that Johnson Inc. sold a 20-year bond issue five years ago, that had a $1000 par value and a 6 per cent coupon rate. Interest is paid semi-annually.

Required -

(a) If the going interest rate is 8 percent, at what price would the bonds sell for today? Show your workings.

(b) Assume that the interest rate remained at 8 percent for the next 15 years. What would happen to the price of Johnson Inc. bonds over time?

Reference no: EM133061632

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