Homework Answers
Answer : $325,592
Face Value of the bond = $300,000
Interest Rate = 8%
Maturity years = 5 Years
Interest Paid on Semi-annual =
number of Payments =n= 5*2 =10
Market interest Rate Per Semi-annum = r = 6%/2 = 3%
Semi-annual interest = $300,000*8%*6/12 = $12,000
Issue Price of the bond : Calculation :
n= 10
r= 3%
= Interest *PVA for 10 Periods at 3% + Face Value * PV of $1due in 10 Years at 3%
= 12,000*8.5302+ 300,000*0.7441
= 102,362+223,230
= $ 325,592.40 (Answer)
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