Two years ago, trans-atlantic airlines sold a $250 million bond issue to finance the purchase of new jet airliners. these bonds were issued in $1000 denominations with an original maturity of 12 years and a coupon rate of 12%. determine the value today of one of these bonds to an investor who requires a 14% rate of return on these securities.

The investor will pay up to $ 985.68

Explanation:

The market value of the bonds will be the discounted value of the coupon payment and maturity at discount rate of 14% which the investor requires

Coupon payment: 1,000 face value x 12% = 120

time to maturity: 12 years bond issued 2 years =  10 years

rate0.14

PV$625.9339

Maturity   1,000.00

time   10 years

rate  0.14

PV   269.74

PV coupon payment 625.94 + PM maturity $269.74 = $985.68

answer; /// i believe the correct answer to the above question is(200 pounds); /good luck

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