Compute the current value of the bond, Financial Accounting

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Compute the current value of the bond

Problem

Amka ltd has recently issued a shs.1000,9% converted bond. The bond can convert into 10 ordinary shares at the end of the 5-year period. The current market price of the shares of Amka ltd is shs.25v per share. The price is expected to grow at the rate of 10% p.a. The investors required rate of return is 12%.

Task

Compute the current value of the bond.

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Financial Accounting: Compute the current value of the bond

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