Assuming there is no compound interest, let's say you pay $4,000 for a perpetual bond from CosoNostra Pizza Inc. with a 3% yearly coupon rate. Assume a discount rate equal to the current interest rate and round up all responses to the closest dollar. Interest rates are raised from 3% to 5% due to changes in the economy. How much can you get for your bond now that market interest rates have changed?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 5MC: What would be the value of the bond described in Part d if, just after it had been issued, the...
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Assuming there is no compound interest, let's say you pay $4,000 for a perpetual bond from CosoNostra Pizza Inc. with a 3% yearly coupon rate. Assume a discount rate equal to the current interest rate and round up all responses to the closest dollar.

Interest rates are raised from 3% to 5% due to changes in the economy. How much can you get for your bond now that market interest rates have changed?  

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