The Mariposa Co

Accounting Mar 15, 2021

The Mariposa Co. has two bonds outstanding. One was issued 25 years ago at a coupon rate of 9%. The other was issued 5 years ago at a coupon rate of 9%. Both bonds were originally issued with terms of 30 years and face values of $ 1,000. The going interest rate is 14% today.

1. What are the prices of the two bonds at this time? Following formula will be used:
2. Discuss the result of part ( a) in terms of risk in investing in bonds.

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