Issue Date Jan 1 2020 Maturity Date Jan 1 2024 Par 50000 Stated interest rate 12%...

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Issue Date Jan 1 2020 Maturity Date Jan 1 2024 Par 50000 Stated interest rate 12%...

Issue Date Jan 1 2020 Maturity Date Jan 1 2024 Par 50000 Stated interest rate 12% annual Interest paid 6% semiannual Market interest rate 10% Calculate present value of bonds without excel.

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Answer 1

Answer #1

Particulars	Coupon Rate	Market rate
Interest rate p.a	12%	10%
Semi-annual interest rate	6%	5%
Number of periods (4 x 2)	8	8

Present Value of the Bond

Particulars	Calculation	Amount
Present value of the principal	50,000	33,842
	(1 + 5%)⁸

Semi-annual interest payment	50,000 x 6%	3,000
Present value of the interest expense	3,000 x [ 1 - ( 1 ) ]	19,390
	(1 + 5%)⁸
	5%

Present value of the bond	33,842 + 19,390	53,232

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Answer 2

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