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Three months ago, Jim purchased $14000 of U.S. Treasury bonds. These bonds have a 30-year maturity...

Three months ago, Jim purchased $14000 of U.S. Treasury bonds. These bonds have a 30-year maturity period, and they pay dividends every three months at an APR of 14%. However, today’s interest rates for similar securities have risen to a (15)%APR (compounded quarterly). In view of the interest-rate increase to (15)%, what is the current value of Jim’s bonds today? draw the cash flow diagram if applicable.

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Answer #1

Current value of the bond= $13,078.35 Calculated using PV function of Excel as follows:

D11 to =PV(D10,D7,08,D2)*-1 A B с D Function 1 Formula arguments Values 2 Face Value (FV) Given FV $14,000 3 Coupon rate (R)

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