Current price of m and n


The McKeegan Corp has two different bonds currently outstanding. Bond M has a face value of $13,000 and matures in 21 years. The bond makes no payments for the first 4 years, then pays $900 every 6 months over the subsequent 13 years, and finally pays $1,100 every 6 months over the last 4 years. Bond N also has a face value of $13,000 and maturity of 21 years; it makes no coupon payments over the life of the bond. If the required return on both these bonds is 8% compounded semi-annually, what is the current price of M and N?

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Finance Basics: Current price of m and n
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