Yield (I/Y) = 8%
Number of periods (NPER) = 5 years
Par value of the bonds (FV) = 20,000
Coupon Payment (PMT) = 800
Required: accumulation of discount in 4th coupon
The amount of discount in 4th coupon would be equal to the difference between value of bond at the end of 3rd coupon payment and value of bond at the end of 4th coupon payment.
Value of bond at the end of 3rd coupon payment can be calculated using financial calculator as below:
Input |
Output |
|
I/Y |
0.08 |
|
NPER |
2 |
|
PMT |
-800 |
|
FV |
-20000 |
|
PV |
18573.39 |
Value of bond at the end of 4th coupon payment can be calculated using financial calculator as below:
Input |
Output |
|
I/Y |
0.08 |
|
NPER |
1 |
|
PMT |
-800 |
|
FV |
-20000 |
|
PV |
19259.26 |
Thus, amount of discount accumulated in 4th coupon payment = 19,259.26 – 18,573.39 = 685.87.
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