Lahey industries have an Rs 1,000 par value bond with an 8% coupon interest rate outstanding. The bond has 12 years remaining to its maturity.
a. If interest is paid annually , where is the value of bond when required return is
i) 7%
ii) 8%
iii)10%
b. Indicate for each case in a whether the bond is selling at a discount, at premium or at its par value.
c. Using 10% required rate of return, find the bond's value when interest is paid semiannually.