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Problem 7-19 A corporation issues a debt instrument such as a bond that promises to pay...

Problem 7-19

A corporation issues a debt instrument such as a bond that promises to pay you annually $70 for five years and $1,000 after five years. What is the maximum amount you would pay for this debt instrument if you wanted to earn 7 percent? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.

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Answer #1

Calculate the present value of bond as follows:

Value of bond is $1000.00

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