Answer each problem in detail with conclusion and results Question: The Garcia C

Question

Answer each problem in detail with conclusion and results

Question: The Garcia Company’s bonds have a face value of $1,000, will mature in ten years, and carry a coupon rate of 16 percent. Assuming that the interest payments are made semi-annually, answer the following: a. Determine the present value of the bond’s cash flows if the required rate of return is 16.64 percent. Answer:
The periodic interest rate is the value of r such that =
The semiannual coupon =
The number of periods =
Price = b. How would your answer change if the required rate of return is 12.36 percent? Answer:
The periodic interest rate is the value of r such that =
Price =

Explanation / Answer

a.

The periodic interest rate is the value of r such that =
The semiannual coupon =
The number of periods = 20
Price = $969.32

b) Price = $1,205.74

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