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What is the present value of a $1,000 bond that pays an annual coupon payment of $90 at the end of each of the next four years and then matures at the end of year 4? Assume the market rate of interest is 8%.

What is the present value of a $1,000 bond that pays an annual coupon payment of $90 at the end of each of the next four years and then matures at the end of year 4? Assume the market rate of interest is 8%.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 5MC
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What is the present value of a $1,000 bond that pays an annual coupon payment of $90 at the end of each of the next four years and then matures at the end of year 4? Assume the market rate of interest is 8%.
Transcribed Image Text:What is the present value of a $1,000 bond that pays an annual coupon payment of $90 at the end of each of the next four years and then matures at the end of year 4? Assume the market rate of interest is 8%.
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