what proceeds from a bond Face Value =4,700,000 Periods= N=5 yrs, Yield/ Market= 4%. Semiannually.

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Question

Answer 1

Answer #1

Proceeds from the Bond

The Proceeds from the Bond is the Present Value of the Face Value plus the Present Value of the Coupon amounts

Face Value = $47,00,000

Semiannual Coupon Amount = $141,000

Yield to Maturity (YTM) = 2% (4% x ½)

Maturity Years = 10 Years [50 Years x 2]

The Proceeds from the Bond = Present Value of the Coupon payments + Present Value of Face Value

= $141,000[PVIFA 2%, 10 Years] + $47,00,000[PVIF 2%, 10 Years]

= [$141,000 x 8.98258] + [$47,00,000 x 0.82035]

= $12,66,544.49 + $38,55,637.01

= $51,22,181.50

The Following Inputs are to be used for calculating the Proceeds from the Bond using financial calculator

PMT = $141,000 ($47,00,000 x 6% x ½)

FV = $47,00,000

N = 10 Years (5 Years x 2)

I/Y = 2% (4% / 2)

Answer 2

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