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XYZ Corporation bonds pay a coupon rate of interest of 12 percent annually and have a maturity value of $ 1000. The bonds are scheduled to mature at the end of 14 years. The company has the option to call the bonds in 8 years at a premium of 12 % above the maturity value. You believe the company will exercise its option to call the bonds at that time. If you require a pretax return of 10 percent on bonds of this risk, how much would you pay for one of these bonds today.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9798583

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