Please provide formula, process and the answer please. The City of...
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Please provide formula, process and the answer please.
The City of Boomingo has two different bonds currently outstanding. Bond A has a face value of $20,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $1,100 every six months over the subsequent eight years, and finally pays $1,400 every six months over the last six years. Bond B also has a face value of $20,000 and a maturity of 20 years; it is a zero coupon bond. If the required return on both these bonds is 5.6 % compounded semi-annually, what is the current price of bond A and bond B 1
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