Lrq inc. issued bonds on july 1, 2006. the bonds had a coupon rate of 5.5%, with interest paid semiannually. the face value of the bonds is $1,000 and the bonds mature on july 1, 2021. what is the intrinsic value of an lrq corporation bond on july 1, 2012 to an investor with a required return of 7%?

The face value of the bond is 1,000 and its coupon rate of 5.5% with semi annual payments, which means that 2 payments are made each year. In order to find the amount of each payment we calculate the 5.5% of 1,000 and divide it by 2

1000*0.055/2= 27.5 is Payment

The bond is to be valued at 2012 and has a maturity till 2021 so the number of years to maturity is 9 years which means that the total number of payments are 18 (9*2). The required rate of return is 7%and we will divide it by 2 as payments are semiannual, so we can assume the ytm of the bond is 3.5%. Now as we know the payment, face value, ytm and number of periods we can put this information in a financial calculator and find the price or present value or intrinsic value of the bond.

FV= 1,000

PMT= 27.5

N= 18

I= 3.5

Compute PV = 901.07

The price or present value or intrinsic value of the bond is $901.07

Explanation:

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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