Microsoft issues a 2-year bond with a face value of $5,000 . In addition to the principal paid at maturity, the bond has 2 annual coupon payments of $500 each, to be received at the end of the first and second year respectively. If the interest rate is 10 percent (0.10) per year, what is the value of the newly issued bond?
a. $5,000.00
b. $6,000.00
c. $5,886.68
d. $4,901.48
e. $41.32
A
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