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AMCOR Limited has a corporate bond outstanding with a 7% coupon,-(Answered)

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Question

AMCOR Limited has a corporate bond outstanding with a 7% coupon, semi-annual interest, 15 years to maturity and a face value of $1,000. Similar bonds currently yield 13%. By prior agreement, the company will skip the coupon payments in years 6, 7, and 8, (6 payments in total; the payments at time 6 through to 8.5). These payments will be repaid, without interest, at maturity. What is the corporate bond?s value?


Period

 


 

Payment Present Value

 

1

 

35

 

32.86

 

2

 

35

 

30.86

 

3

 

35

 

28.97

 

4

 

35

 

27.21

 

5

 

35

 

25.55

 

6

 

35

 

23.99

 

7

 

35

 

22.52

 

8

 

35

 

21.15

 

9

 

35

 

19.86

 

10

 

35

 

18.65

 

11

 

35

 

17.51

 

12

 

0

 

13

 

0

 

14

 

0

 

15

 

0

 

16

 

0

 

17

 

0

 

18

 

35

 

11.27...

 

Paper#9256417 | Written in 27-Jul-2016

Price : $16
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