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The Morgan Corporation has two different bonds currently outstanding. Bond M has a face value...

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Finance

The Morgan Corporation has two different bonds currently outstanding. Bond M has a face value of $20,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $800 every six months over the subsequent eight years, and finally pays $1,000 every six months over the last six years. Bond N also has a face value of $20,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond. If the required return on both these bond is 8 percent compounded semiannually, what is the current price of Bond M and Bond N? [Answer = $13,117.88, $4,154.78]

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