Problem:
Leggio Corporation issued 15-year, 6% annual coupon bonds at their par value of $1,000 one year ago. One year later the market interest rate on these bonds had dropped to 5%.
Required:
Question: What is the new price of the bonds, given that they now have 14 years to maturity?
Select the correct answer.
- $1,097.01
- $1,100.35
- $1,098.62
- $1,098.99
- $1,099.53
Note: Please provide through step by step calculations.