8. A company decided to issue a perpetual bond (a bond with a never ending...
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8. A company decided to issue a perpetual bond (a bond with a never ending interest payment and no maturity date). The bond will pay $80 in interest each year (at the end of the year), but it will never return the principal. The current discount rate for the bond is 7%. What should this bond sell for in the market? a. $984.96 c. $1,142.86 b. $1,091.73 d. $1,235.79 9. Quincy Enterprises issued a bond having a par value of $1,000, a 5 year life and a 10.6% coupon rate. If interest is paid semiannually and the discount rate is 10% rate of return, what is the current value of the bond? a. $878.90 c. $1,023.17 b. $912.55 d. $1,123.54
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