Engro Foods Pakistan wants to generate Rs. 1,500,000,000/- through issuance of bonds in Pakistan stock exchange at a cost of capital of 14.5% annually. The bonds will mature in 15 years. Suppose the prevailing average market rate is 12.5%. and the bond’s par value is Rs. 10,000/-. At what price the bond will be issued? Justify your finding with appropriate rationale.
Engro Foods Pakistan wants to generate Rs. 1,500,000,000/- through issuance of bonds in Pakistan stock exchange at a cost of capital of 14.5% annually. The bonds will mature in 15 years. Suppose the prevailing average market rate is 12.5%. and the bond’s par value is Rs. 10,000/-. At what price the bond will be issued? Justify your finding with appropriate rationale.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Engro Foods Pakistan wants to generate Rs. 1,500,000,000/- through issuance of bonds in Pakistan stock exchange at a cost of capital of 14.5% annually. The bonds will mature in 15 years. Suppose the prevailing average market rate is 12.5%. and the bond’s par value is Rs. 10,000/-. At what price the bond will be issued? Justify your finding with appropriate rationale.
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