Premier Textbooks has been a leader in elementary textbooks for over 25 years. Recently, you received a bonus of $10,000 from your company, which had their best year in 5 years.
You would like to invest in bonds with a good, solid company and are considering Premier Textbooks. Recently,Premier has offered a new 15 year bond issue of $500,000, with a par value of $1000 per bond. They pay 5.5per cent interest and the current market price for these bonds is $1085. Your required rate of return is 7%.
Compute the bond’s expected rate of return.
Calculate the value of the bond to you,given your required rate of return.
Should you purchase the bond? Explain.
Name at least 2 other facts about this or any other bond you might consider buying that would help you decide on whether you should buy the bond.
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