The Desreumaux Company has two bonds outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bond L matures in 15 years, whereas Bond S matures in one year. One interest payment...

Valuation of Bond L
Face value = $ 1,000
Maturity period = 15 years
Annual Coupon = $ 100
Case 1: Interest Rate = 5%
The bond valuation is as computed in the table below.
Year
Coupon Payment
($)
Principal
Repayment
Total inflow
($)
PV Factor
@5% PV ($)
1 100 0 100 0.952 95.24
2 100 0 100 0.907 90.70
3 100 0 100 0.864 86.38
4 100 0 100 0.823 82.27
5 100 0 100 0.784 78.35
6 100 0 100 0.746 74.62
7 100 0 100 0.711 71.07...