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15 National Steel 15year $1 000 par value bonds pay 8 percent interest annually The market price of the

Question

15 National Steel 15-year, $1,000 par value bonds pay 8 percent interest annually. The market price of the

bond is $1,085, and your required rate of return is 10 percent.

a. Compute the bond’s expected rate of return.

b. Determine the value of the bond to you, given your required rate of return.

c. Should you purchase the bond? Reason.

Financial Accounting

15 National Steel 15year $1 000 par value bonds pay 8 percent interest annually The market price of the