Lahey industries have an Rs 1,000 par value bond with an 8% coupon interest rate outstanding.

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Lahey industries have an Rs 1,000 par value bond with an 8% coupon interest rate outstanding. The bond has 12 years remaining to its maturity.

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a. If interest is paid annually , where is the value of bond when required return is

i) 7%

ii) 8%

iii)10%

b. Indicate for each case in a whether the bond is selling at a discount, at premium or at its par value.

c. Using 10% required rate of return, find the bond’s value when interest is paid semiannually.