Builtrite bonds have the following: 4 %2% coupon, 16 years until maturity, $1000 par and are currently selling at $965. If you would be happy to make an 5% return, what would you be willing co pay for the bond?

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.