1. DAH, Inc. has issued a 12% bond that is to mature in nine years.

s. The bond had a $1,000 par value, and

interest is due to be paid semiannually. If your required rate of return is 10%, what price would you be
willing to pay for the bond?

2. Garvin, Inc.’s bonds have a par value of $1,000. The bonds pay semiannual interest of $40 and mature
in five years.
a. How much would you pay for Garvin bonds if your required rate of
return is 10%?
b. How much would you pay if your required rate of return is 8%?

3. Given the following information, determine the market value of EAO Company bonds.
Par value $1,000
Coupon rate 10%
Years to maturity 6
Market rate 8%
Interest paid semiannually

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