The cost of a project from a construction firm is acquired from securing a bond contract from a private lender. The bond will mature in 10 years and has a par value of 1 million dollars in 1000 units. The contract states that the interest payments are made per quarter at 8%. If the private lender desires to earn 12% nominal interest compounded quarterly on 10,000 worth of the bond. what should the purchase price be?

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
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The cost of a project from a construction firm is acquired from securing a bond contract
from a private lender. The bond will mature in 10 years and has a par value of 1 million
dollars in 1000 units. The contract states that the interest payments are made per quarter
at 8%. If the private lender desires to earn 12% nominal interest compounded quarterly on
10,000 worth of the bond. what should the purchase price be?
Transcribed Image Text:The cost of a project from a construction firm is acquired from securing a bond contract from a private lender. The bond will mature in 10 years and has a par value of 1 million dollars in 1000 units. The contract states that the interest payments are made per quarter at 8%. If the private lender desires to earn 12% nominal interest compounded quarterly on 10,000 worth of the bond. what should the purchase price be?
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