Homework Answers
Let's calculate the market value of the bond using PV function
N = 20 x 2 = 40, PMT = 6.2% x 1000 / 2 = 31, FV = 1000, I/Y = 7.5%/2 = 3.75%
Present Value of the Bond = 31*PVIFA(3.25%,40) + 1,000*PVIF(3.25%,40)
= 31*20.5510 + 1,000*0.2293
= $866.38
.
Lunar needs to raise a sum including commission = 6,300,000 / (1 - 2.3%) = $6,448,311.16
No. of bonds = 6,448,311.16 / 866.38 = 7,443 bonds
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