Kic inc plans to issue 8 million of bonds with a coupon, Financial Management

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Kic inc plans to issue 8 million of bonds with a coupon

KIC, Inc., plans to issue $8 million of bonds with a coupon rate of 11 percent and 20 years to maturity. The current market interest rates on these bonds are 10 percent. In one year, the interest rate on the bonds will be either 12 percent or 8 percent with equal probability. Assume investors are risk-neutral. a. If the bonds are noncallable, what is the price of the bonds today?

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Financial Management: Kic inc plans to issue 8 million of bonds with a coupon

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Financial Management: Kic inc plans to issue 8 million of bonds with a coupon

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