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I need some help regarding IRR calculation in the following case:
A bond with an issue cost of $1 million will pay a coupon rate of 5% interest for two years then 7% interest for two tears. Interest is paid annually on the anniversary of the bond issue. The bond will be redeemed at par after four years. The company has that issued the bond uses amortised cost method.
Whats the effective rate.?
Could anyone please help. I would be grateful. Looking to hear from oneone soon.
Thanks.
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