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On February 2010 a company issued a bond with a face value of $500,000 that matures...

On February 2010 a company issued a bond with a face value of $500,000 that matures exactly 25 years later. The coupon rate is 5% p.a. compounded half yearly. What is the bond’s value on 4 February 2018 assuming the market yield in 7% p.a. compounded half yearly

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3.5% [7% / 2: Annual rate is converted into semiannual rate Market yield rate, RATE # of Semiannuals to maturity, NPER Semiannual coupon receipts, PMT Maturity value at the end, FV Semiannual coupon type, TYPE Bonds value on 4 February 2018 34 [17 years x 2 as 8 years out of 25 years were elapsed already on 4-Feb-2018] $12,500 [$500,000 x 5% / 2 or $500,000 x 2.5%) $500,000 [Par value] 0-0 if coupons paid at the end of each period: 1 if coupons paid at the beginning of each period $401,496.58 [Ref: NOTE] NOTE Bonds value on 4 February 2018 is calculated using EXCEL FUNCTION PV(rate, nper,pmt,fv,type) where rate-3.5%; nper-34; pmt-12500; fv-500000; type-0; Here, value for pmt & fv are negative as they denote cash inflows; type 0 because coupons paid at the end of each period only 7%/2 [796 / 2; Annual rate is converted into semiannual rate -(25-8)*2 [17 years x 2 as 8 years out of 25 years were elapsed already on 4-Feb-2018] 1 Market yield rate, RATE 2 # of Semiannuals to maturity, NPER 3 Semiannual coupon receipts, PMT 4 Maturity value at the end, FV 5 Semiannual coupon type, TYPE 6 Bonds value on 4 February 2018 -84*5%/2($500,000 x 5% / 2 or = $500,000 x 2.5%) $500,000 [Par value] 0 0 if coupons paid at the end of each period; 1 if coupons paid at the beginning of each period. PV(B1,B2,-B3,-B4,B5) Ref: NOTE]

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