If the inflation rate is expected to be 25 each 6-month, Financial Management

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If the inflation rate is expected to be 25 each 6-month

A 15-year $50,000 bond with a dividend of 10% per year, payable semi-annually, is currently for sale. If the expected rate of return of the purchaser is 8% per year, computed semi-annually, and if the inflation rate is expected to be 2.5% each 6-month period, what is the bond worth now?

(a) without an adjustment for inflation;

(b) with an adjustment for inflation

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Financial Management: If the inflation rate is expected to be 25 each 6-month

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Financial Management: If the inflation rate is expected to be 25 each 6-month

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