Smith Company has an issue of $1,000 par value bonds with a 7 percent coupon rate with interest payments made annually. The issue has 20 years remaining to the maturity date. Bonds of similar risk are currently selling to yield a 8 percent annual rate of return. The current value of each bond is _____.
A. $901.82
B. $1,105.94
C. $932.90
D. $932.05
Answer: A. $901.82
Business
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