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Determine the amount you would be willing to pay for a $1,000 par value bond paying $80 interest each year (annual) and maturing in 12 years, assuming you wanted to earn a 9% rate of return.
a
Interest per year
mce_markernbsp; 80.00
b
Years to maturity
12
c
Par value
mce_markernbsp; 1,000.00
d
Required rate of return
9%
e
Intrinsic value of bond
mce_markernbsp; 928.39
($1000/1.09^12 + $80 x PVIFA(12,9%)
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