Finance Assignment | Top Essay Writing

You have collected information about firm XYZ as follows:
 The debt of the firm: par value = $800, annual coupon = $100 (paid once a year), maturity = 3 years.  The total value of the firm (including equity and the debt) = $1,000 now.  The firm’s future values follow a two-state path with Upstate growth multiple u = 1.3 and Downstate growth multiple d = 0.769 each year.  The annual risk-free rate = 2%.

There is a Treasury bond with a par value of $800, an annual coupon of $100, and a maturity of 3 years. Suppose that the term structure of spot rates is flat at 2%. What is the value of the Treasury bond? Get Finance homework help today