9) . Homer's Trucking Company bonds have a 11% coupon rate with semi-annual coupon payment. The bonds have a par value of $1,000 and will mature 2 years from now. Compute the value of Homer's Trucking Company bonds if investors' required rate of return is 9.5%. (Using the formula instead of using the financial function on your calculator) A) $1,197.27 B) $1,133.05 C) $1,098.99 D) $1,026.75 Please provide the Formula used to solve the problem!
n = | 4 | ||
I = | 4.75% | ||
Amuont | Factor | Present value | |
Interest | $ 55 | 3.5666 | $ 196.17 |
Principal | $ 1,000 | 0.8306 | $ 830.58 |
Value of bond | $ 1,026.75 |
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