SD
On a $1000 1year bond paying 7% how much can I pay today for my bond to earn 15%? Answer $930.43(intrinsic value)
$1000 1year bond @ 7% = $1070.(compound growth calculation)
$1070 discounted at %15 today = $930.43 (discounted cashflow valuation)
The discounted cash that I can take out of my bond during its remaining life is $930.43 if I hope to earn 15%.