Homework Answers
Answer : option C , $3,06,630
Explanation :
calculation of price of the bonds at jan 1, 2021:-
Workings :-
i)Face Value of Bonds = $290,000,
ii)Annual Coupon Rate = 13.00%
Semiannual Coupon Rate = 6.50%
Semiannual Coupon = 6.50% * $290,000 = $18,850
iii)Time to Maturity = 10 years
Semiannual Period = 20,
iv) Market Yield = 12.00%
Semiannual Market Yield = 6.00%,
Current Price of the bond = $18,850 * PVAF(6%, 20) + $290,000 *
PVF (6%, 20)
= $18,850 * 11.46992 + $290,000 * 0.31180
= $2,16,208 + $90,422
= $3,06,630
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