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Suppose that three years after the bonds were issued the

Assume Mellencamp Healthcare System sold bonds that have a 15 year maturity, an 11 percent coupon rate with annual payments, and a $1,500 par value.

a. Suppose that three years after the bonds were issued, the required interest fell to 6%. What would the bonds value be?

b. Suppose that three years after the bonds were issued, the required rate rose to 14%. What would the bonds value be?

c. Compare the answers in both a and b and explain the concept.

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Accounting Basics: Suppose that three years after the bonds were issued the

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Accounting Basics: Suppose that three years after the bonds were issued the

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