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A company has a 10-year bond with coupon rate of 10%, paying semi-annually. However, at...

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Accounting

A company has a 10-year bond with coupon rate of 10%, paying semi-annually. However, at the beginning, due to unexpected immediate cash flow from the project, the company does not want to commit to the first four interest payments (not the same as four years). They promise to repay these interests in one lump sum at maturity date instead, without interest. What is the fair price of the bond if the yield-to-maturity on similar bonds is 8%? (Note: grading is based on both accuracy and efficiency)

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