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Seaside issues a bond with a stated interest rate of 10%, the face value of $50,000,...

Seaside issues a bond with a stated interest rate of 10%, the face value of $50,000, and due in 5 years. Interest payments are made semi-annually. The market rate for this type of bond is 12%. What is the issue price of the bond?

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Answer #1

We see that the issue price of the bond is given as equal to=50000*10%/12%*(1-1/1.06^10)+50000/1.06^10=46319.96

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