Question

Mountain Excursions issues a bond due in 10 years with a stated interest rate of 7% and a face value of $200,000. Interest payments are made semi-annually. The market rate for this type of bond is 6%. What is the issue price of the bond (rounded to nearest whole dollar)?

Answer 1

Amoen Calculation of the issue prie of the bond & Price of bond = Present value of all future ash flows. • Tukesest ex PVAT(YTMW , nx 2) + Fau value x puf uf (YTM, nx2] annuity 2 heu PUAF ANF Perent value ferter Formula Present value factor Formula Prie = $200,000 x 7%. x PUMF (GY., Tox)) + $200000 x Puf (ex., 10x 2) (170.03 )-20 $7000 x + $ 200900 x (1 +0.03)20 0:03 $ 7000 * I + $ 200.000 مر (1.03)20 0.03 (103) J+ $ 200000 x O-S53676 0.03 - $7000 55,3676)+ $7.000 x 0.446324 + $ 110735,20 0.03 $70 $104142-27 + $ 110735.20 $ 214877.47 so. The linee pies of the bond is $ 214877 or $214878 z Anwer Notes PUAFE on) Р rate Futur value (It cate)n. pur 2