Problem:
Due to a number of lawsuits related to toxic wastes, a major chemical manufacturer has recently experienced a market reevaluation. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8 percent, with interest paid semiannually. The required nominal rate on the debt has now risen to 12 percent.
Required:
Question: What is the current value of this bond?
Note: Show supporting computations in good form.