The 6 percent, semi-annual bonds issued by Black Water Mills mature in 9 years and have a face value of $2,200. What is the current value of one of these bonds if the market rate of return is 11.10 percent?

To find the current value of the bond, we need to calculate the present value of its future cash flows. In this case, the future cash flows are the semi-annual interest payments and the face value payment at maturity.

Here are the steps to calculate the current value of the bond:

Step 1: Determine the total number of periods the bond will have. Since the bond is semi-annual and matures in 9 years, it will have 18 periods (9 years * 2 periods per year).

Step 2: Calculate the periodic interest rate. The market rate of return is given as 11.10 percent, which is the annual rate. Since the bond pays semi-annual interest, we divide this rate by 2 to get the periodic rate: 11.10% / 2 = 5.55%.

Step 3: Calculate the present value of the interest payments. Since the bond pays 6 percent interest on a face value of $2,200, the semi-annual interest payment will be (6% * $2,200) / 2 = $66 per period. We can then calculate the present value of each interest payment using the periodic interest rate and the total number of periods.

Step 4: Calculate the present value of the face value payment at maturity. Since this payment will occur at the end of the bond's life, we only need to discount it by the periodic interest rate for the final period.

Step 5: Sum up the present values of the interest payments and the present value of the face value payment to get the current value of the bond.

Using this approach, we can calculate the current value of the bond.