Semi annual interest payment = 39,800,000 x 8% x 6/12
= $1,592,000
Periods to maturity = 30
Market interest rate = 7%/2
= 3.5%
Present value of principal to be received at the maturity = Par value of bonds x Present value factor (r%, n)
= 39,800,000 x Present value factor (3.5%, 30)
= 39,800,000 x 0.35628
= $14,179,944
Present value of interest to be received periodically over the term of the bonds = Interest x Present value annuity factor (r%, n)
= 1,592,000 x Present value annuity factor (3.5%, 30)
= 1,592,000 x 18.39205
= $29,280,144
Issue price of bond = Present value of principal to be received at the maturity + Present value of interest to be received periodically over the term of the bonds
= $14,179,944 + $29,280,144
= $43,460,088
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