Ajax Corporation Issued 10,000 Units of $1,000 Face Value Bonds

question 357

Multiple Choice

Ajax Corporation issued 10,000 units of $1,000 face value bonds that mature in 20 years and have a 4% coupon rate that is paid semi-annually. If the bonds were sold at 103.5% of their face value,
Calculate the yield to maturity at the end of year 4.

• A) 3.50%
• B) 3.58%
• C) 3.64%
• D) 3.71%
• E) 3.75%

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Definitions:

Combined Present Value

A method of evaluating the overall present value of multiple future cash flows by discounting them back to their present value at a specific discount rate.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to run its operations.

Beginning

The starting point or initial state of an event, process, or accounting period.

Released

Typically refers to products, information, or software being made available to the public or to a specific group.