Question

Question 22 (1 point) Calculate the cash value of a bond that will mature with a value of $16 500 in 7 years and 5 months. The bond is discounted at 5.8% compounded semi-annually. O A) $10 979.48 B) $11 117.48 OC) $10 797.48 OD) $10 997.48 O E) $10 779.48

Answer 1

Answer-:

Present Value Paid at Maturity or cash value of bond = Face Value / (Discount Rate/ 100) ^ Number Payments

Given-:

Face value= $16,500

Discount rate= 5.8% compounded semi annually

Number of payments = 2* 7.417 years

= 14.834

By applying the above mentioned formula,

We get cash value of bond as $ 10797.48.

So, the correct answer is (c). $10,797.48

Thankyou......