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Due to a number of lawsuits related to toxic wastes, a major chemical manufacturer has recently...

Due to a number of lawsuits related to toxic wastes, a major chemical manufacturer has recently experienced a market reevaluation. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8 percent, with interest paid semiannually. The required nominal rate (rate of interest) on this debt has now risen to 16 percent. What is the current value of this bond?

a.   $1,273

b.   $1,000

c.   $7,783

d.   $ 550

  1. $ 450
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