Required rate of return on bonds, Accounting Basics

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Required rate of return on bonds

Problem:

Podunk Communications bonds mature in 6 1/2 years with a par value of $1,000. They pay a coupon rate of 9% with semi-annual payments.

Required:

Question: If the required rate of return on these bonds is 11% what is the bond's value?

$1,026.73
$973.76
$1,022.74
$908.83

Note: Please explain comprehensively and give step by step solution.

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Accounting Basics: Required rate of return on bonds

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Accounting Basics: Required rate of return on bonds

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