Due to a Number of Lawsuits Related to Toxic Wastes,a

question 51

Multiple Choice

Due to a number of lawsuits related to toxic wastes,a major chemical manufacturer has recently experienced a market reevaluation.The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8 percent,with interest being paid semiannually.The required simple rate on this debt has now risen to 16 percent.What is the current value of this bond?

• A) $1,273
• B) $1,000
• C) $7,783
• D) $550
• E) $450

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Definitions:

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