Homework Answers
Calculation of Bond Price
Issue Price = $ 4,50,000
Market Rate is 10% & Bond Rate is 8%.
Tenure of Bond is 9 years.
Interest will be paid semi annually.
Cost of Bond = Issue Price * PVIF(10%, 9) + Interest * PVIFA(5%,18)
= 4,50,000 * PVIF(10%,9) + 18,000 * PVIFA(5%,18)
= 4,50,000 * 0.4241 + 18,000 * 11.6896
= 1,90,845 + 2,10,413
= 4,01,258
Issue Price of Bond = $ 4,01,258
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issue price of the bond.
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