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

support your answer using the data presented. (5 points). 4. based on the information you used to schedule and curve, which product would you recommend the shoe hut focus on, and why? provide details that support your answer. (5 points).